Name the customer, describe the work in terms they would recognise, break out labour from anything you bought, show how the price was arrived at, add tax only if it applies to you, state the total and how to pay it, and send it while the job is still fresh in everyone’s mind.
Describe the work, not the category
The difference between an invoice that gets paid and one that gets a reply is almost always the line items. A category name tells the customer what industry you are in. A description tells them what happened at their address, on a particular day.
| Invites a question | Reads as finished work |
|---|---|
| Cleaning services | Fortnightly clean, 3-bed house — 14 and 28 July |
| Consulting | Pricing review — two workshops and written recommendations |
| Labour | Replace kitchen tap, 1.5 hrs |
| Photography | Half-day shoot, 40 edited images delivered 12 August |
The right-hand column costs about eight seconds more to type and removes the phone call. It also means that in six months, when someone asks what that payment was, the invoice answers on its own.
Pick a pricing shape and be consistent
Most service work bills in one of four shapes. Mixing them on one invoice is fine — mixing them silently is what confuses people.
- By time. Hours, half-days or days, at a stated rate. Honest for open-ended work, and it puts the arithmetic in front of the customer. Show the number of units and the rate, always.
- Flat fee for a defined job. One price for one clearly bounded outcome. Better for anything you have done fifty times and can price from memory. The bound is what matters: define it, or you will be arguing about it.
- Per unit of the work itself. Per room, per window, per square metre, per word, per student. Natural for anything that scales with something the customer can count.
- Pass-through costs. Materials, parts, travel, prints, venue hire. These belong on their own lines, not folded into a labour figure.
Keep labour and materials apart
Two reasons, and neither is bookkeeping. First, customers who query an invoice almost always query the parts, and a separate line lets you answer in one message. Second, the two numbers move independently — your rate is yours, but a part that cost $94 last month might cost $110 this month, and a combined figure makes that look like your price went up.
Whether you pass parts through at cost or add a margin is a business decision, not an invoicing one. Whichever you choose, be consistent about it, and do not describe a marked-up figure as “at cost”.
Example
A month of recurring work, billed once
A gardening round for one customer, with the visits itemised, an extra job called out separately, and the green waste run passed through.
- Fortnightly garden maintenance2 visits @ $65 — 6 and 20 July
- $130.00
- Hedge reduction, rear boundaryAgreed 6 July, 3 hrs @ $45
- $135.00
- Green waste disposalTip fees, at cost
- $28.00
- Subtotal
- $293.00
- Regular customer discount (5%)
- −$14.65
- Total due
- $278.35
Payment within 14 days by bank transfer. The hedge reduction was agreed on site on 6 July and is billed separately from the regular visits so the recurring figure stays comparable month to month.
Tax on services
This is the part of the topic where confident advice does the most damage. Whether you add tax to a service invoice depends on where you are, whether you are registered, and — in the US especially — on exactly which service you performed.
Most US states tax specific, enumerated services rather than treating services as taxable by default, and the lists differ substantially between states and change over time. Two neighbouring states can treat the same job differently. Elsewhere, VAT and GST systems generally start from the opposite assumption and turn on registration thresholds.
If tax does apply to you, show it as its own line with the rate stated, after any discount and before the total. If it does not, leave it off entirely — an invoice with a $0.00 tax line looks like something went wrong.
When to send it
- Straight after the job, for anything short. The work is fresh, the customer is still thinking about it, and you are not reconstructing it from memory on a Sunday evening.
- On a monthly cycle, for recurring customers. One invoice listing every visit is easier for both sides than six small ones, and it makes the total comparable month to month.
- In stages, for anything that runs for weeks. A deposit, then progress invoices, then a final one. Agree the stages before the work starts, not when the first one is due.
Whichever you use, the sending is the easy part — a PDF attached to a message is fine for most domestic customers, and email is safer for anything going through a company’s finance process.
What to do when it is queried
It will happen occasionally, and the invoice itself decides how long it takes to resolve. If the line items describe real, dated, specific things, the conversation is short. If they say “services rendered”, you are reconstructing the job from memory against a customer doing the same thing, differently.
Keep your copy of what you sent — not a screenshot of a message thread, the actual document. The IRS expects records behind reported income to be adequate to substantiate it, and quite apart from tax, being able to reopen the exact PDF you sent is what ends a disagreement.
For the mechanics of the document itself — the numbering, the dates, the payment block — see what to include on an invoice. If you are pricing work before you do it, an estimate is the document you want first.
Sources
Tax treatment of services varies by jurisdiction and by the specific service. Nothing here is tax advice; check with the authority that covers you.
- Federation of Tax Administrators — State tax agenciesWhere to confirm whether a particular service is taxable in a particular US state — the only reliable answer, since states enumerate taxable services differently.
- Internal Revenue Service — Topic no. 305, RecordkeepingThat records supporting income reported on a return need to be kept and be adequate to substantiate it.
