Invoice Calculator

About the Invoice Calculator

An invoice is a simple document with a surprising number of ways to go wrong. A discount applied in the wrong place changes the tax. Shipping taxed when it should not be, or not taxed when it should, puts the total out. A deposit that is forgotten leads to an awkward conversation with a customer who has already paid part of the bill. And a small arithmetic slip on a large invoice can take weeks to put right.

This invoice calculator does the arithmetic in the right order. Enter up to three line items as a quantity and a unit price, and it adds them into a subtotal, takes off any discount before tax, adds sales tax or VAT on the discounted amount, adds shipping, and subtracts any amount already paid to give the balance due. Every step is shown, so you can copy the figures straight onto your invoice and explain them if a customer asks.

How to Use the Invoice Calculator

For each line on the invoice, enter the quantity and the unit price. You can use one, two or three lines; leave unused lines blank.

Enter a discount percentage if you are offering one. It is taken off the subtotal before tax.

Enter the sales tax or VAT rate that applies.

Enter shipping if you are charging for delivery. It is added without tax.

Enter any amount already paid, such as a deposit.

How the Invoice Total Is Calculated

  line amount   =  quantity × unit price
  subtotal      =  sum of line amounts
  discount      =  subtotal × discount %
  taxable       =  subtotal − discount
  tax           =  taxable × tax rate
  total         =  taxable + tax + shipping
  balance due   =  total − amount paid

Each amount is rounded to the cent as it is calculated, the way it would appear on a printed invoice.

Step-by-Step Example

Ten items at 45, two at 120 and one at 75, a 10% discount, 20% VAT, 15 for shipping and a 200 deposit already paid.

  Line 1:      10 × 45             =  450.00
  Line 2:      2 × 120             =  240.00
  Line 3:      1 × 75              =  75.00
  Subtotal:                           765.00
  Discount:    765.00 × 10%        =  76.50
  Taxable:     765.00 − 76.50      =  688.50
  VAT:         688.50 × 20%        =  137.70
  Total:       688.50 + 137.70 + 15 =  841.20
  Balance:     841.20 − 200.00     =  641.20

Discounts, Tax and Shipping

Discount before tax. In almost every tax system, tax is charged on the price the customer actually pays. So the discount comes off first, and tax is worked out on the reduced amount. Taking tax on the full subtotal and then applying the discount would overcharge tax.

Shipping and tax. Whether delivery charges are taxable depends on the country and on what is being delivered. In many places, delivery follows the tax treatment of the goods themselves. This calculator adds shipping without tax. If your delivery charge is taxable, enter it as a line item so it is included in the taxable amount.

Tax-inclusive prices. If your prices already include tax, divide by one plus the rate to find the net figure first. The sales tax and VAT calculators do that conversion.

What an Invoice Should Include

Requirements vary by country, but a clear, complete invoice usually shows your business name, address and contact details; the customer's name and address; a unique invoice number; the invoice date and, where relevant, the date of supply; a description of each item or service with quantities and prices; any discount; the tax rate and amount with your tax registration number; the total; and the payment terms, including the due date and how to pay.

Numbering invoices in sequence and keeping copies makes bookkeeping and tax returns much easier, and in many countries it is a legal requirement for businesses registered for sales tax or VAT.

Getting Paid on Time

A correct invoice is the first step towards being paid promptly. State a clear due date rather than a vague "payable on receipt", and make paying easy by listing bank details or a payment link. Send the invoice as soon as the work is done, and follow up politely a few days before and after the due date.

For larger jobs, ask for a deposit before starting and invoice in stages. That spreads the risk and keeps cash coming in while the work is under way. If a customer still pays late, the late payment interest calculator works out the interest you may be entitled to claim.

Keeping Invoices Consistent

Using the same layout, numbering and wording on every invoice saves time and avoids mistakes. A simple template with your details, bank information and standard payment terms already filled in means only the customer, date and line items change each time.

Understanding Your Result

Amount due is the invoice total, or the balance due if part has already been paid.

Subtotal is the sum of the line items before any discount.

Discount shows the amount taken off and what is left.

Tax shows the tax charged on the discounted amount.

Invoice total includes tax and shipping, and notes any payment received.

Worth knowing explains the order of the calculation, or flags an overpayment.

When Should You Use This Calculator?

Preparing an invoice by hand or checking one from your software.

Quoting a customer the final price including tax.

Checking a supplier's invoice before paying it.

Working out a balance after a deposit.

Explaining a total to a customer who queries it.

Common Mistakes

Applying the discount after tax, which overcharges tax.

Forgetting the deposit already received.

Taxing shipping when it should not be taxed, or the reverse.

Using a tax-inclusive price as if it were net.

Leaving out the due date and payment details.