Separate labour from materials
Customers check contractor invoices against the quote, line by line. Splitting labour from materials makes that easy, and in many places it matters for tax too, because labour and materials can be taxed differently. Give each its own line and, where rates differ, its own tax rate.
| Method | Quantity | Price | Works best for |
|---|---|---|---|
| Hours | Hours worked, e.g. 24 | Hourly rate | Repairs and open-ended work |
| Days | Days on site | Day rate | Larger jobs with a crew |
| Fixed price | 1 | Agreed price | Work quoted as a package |
| Per unit | Square metres, metres or units | Rate per unit | Tiling, flooring, fencing, painting |
Progress payments
Longer jobs are often paid in stages: a deposit for materials, payments at agreed stages, and a final payment on completion. Write the stage on the invoice, for example "Progress payment 2 of 3", and refer to the quote number in Notes. If a payment has already been received against this invoice, enter it in Amount paid and the balance due updates.
- Variations: bill extra work the customer approved as separate lines, referencing the change order or message where it was agreed.
- Retention: if the contract lets the customer hold back a percentage until defects are fixed, show it as a note with the amount and release date, so both sides track it.
- Quote first: use the quote maker for the estimate, then copy the agreed lines into the invoice.
The example in numbers
| Line | Quantity | Price | Amount |
|---|---|---|---|
| Labour: bathroom tiling, 3 days | 24 hours | 55.00 | 1,320.00 |
| Materials: tiles, adhesive and grout | 1 | 640.00 | 640.00 |
| Waste removal | 1 | 120.00 | 120.00 |
| Subtotal before tax | 2,080.00 |
If you add a markup to materials, decide whether to show it. Many contractors include it in the materials price; others list materials at cost and charge a separate handling line. Either is fine if it matches what the customer agreed to.
Details customers and authorities may expect
- The job address, if it differs from the customer's billing address. Put it in Notes.
- Your licence or registration number, where your trade or region requires one on paperwork. Check the local rule.
- Warranty terms or a reference to them.
- Payment details, including any card or transfer fees you agreed in advance.
Tax on contractor invoices
If you are registered for VAT or GST, choose your country in Region; some countries have special rules for construction services, such as the UK's domestic reverse charge for certain building work. If you invoice in the US, sales tax on labour and materials depends on the state; see the US invoice template.