How an invoice total is worked out
Work it out as lines, discount, tax, shipping, then anything already paid. The same four numbers give a different total in a different order, and this is the order a client will recognise.
How the total is worked out
The invoice calculator and the invoice editor on this site both build the total in the same order:
| Subtotal | Every line, quantity multiplied by unit price |
|---|---|
| Discount | Taken off the subtotal, never off the tax |
| Taxable amount | Subtotal minus the discount |
| Tax | Charged on the taxable amount, so a discount reduces the tax with it |
| Total | Taxable amount, plus tax, plus shipping |
| Balance due | Total minus whatever has already been paid |
Shipping goes on after tax. That's the simpler reading, and most invoicing tools use it. However, it isn't universal. Where a jurisdiction treats delivery as part of the taxable supply, the tax this site works out will be lower than the figure your tax authority expects. I recommend checking the rule that applies to you before you send the invoice.
Tax-inclusive and tax-exclusive prices
Decide whether your prices include tax when you quote, not when you invoice. Prices include tax when the figures you quoted are what the client pays. In that case the tax is extracted from the total rather than added to it, so changing the rate moves the tax line and leaves the total where it is. The calculator has a setting for this. Leave it unticked and the tax goes on top, which is the usual practice for business-to-business invoicing in most of Europe and North America.
The difference is easy to miss. Say you invoice 1,000 at 10%. Exclusive, the tax is 100 and the total is 1,100. Inclusive, the tax is 90.91 and the total stays at 1,000.
Rounding, and why the currency matters
Every figure is held as a whole number of the currency's smallest unit (cents, yen, rupiah) and only turned back into a decimal for display. That keeps subtotal minus discount plus tax equal to the total, instead of a cent out after a long list of lines.
You'll see the effect when you switch currency in the calculator or the editor. The Japanese yen and the Indonesian rupiah have no sub-unit, so a price of 1,500.75 becomes 1,501 as soon as you pick one of them, and the rounded figure is what you charge. The Kuwaiti dinar has 3 decimal places instead of 2, and rounds to those.
A percentage discount and a fixed one are not interchangeable
Enter the discount in the form you agreed it. For example, 10% off a 2,400 invoice and “240 off” give the same figure until something else changes. Add a line and the percentage grows with the invoice, while the fixed amount stays at 240. Both are correct, and they suit different agreements.
A percentage fits when you agreed a proportion, such as a standing discount or a volume arrangement. A fixed amount fits when you agreed a sum, such as a goodwill credit or a correction for something that went wrong. I recommend matching the form to the agreement, because then the invoice still says what you meant after it's edited.
Where shipping sits, and why it is after the tax on this site
The rules for delivery vary. In some places it's taxable at the same rate as what's being delivered, in others it isn't, and in others it depends on what's in the box. This site puts shipping after the tax so that the figure you enter is the figure that appears, and nothing is taxed that you didn't ask to be taxed.
If delivery is taxable where you invoice, put it on a line item. Leave the shipping field empty. The delivery charge then sits inside the subtotal, is taxed with everything else, and the invoice shows why.
The balance is not the total
An invoice after a deposit should print both numbers. Say you took a deposit up front. The next invoice needs what the work came to and what is still owed. Show only the balance and the client asks what the full price was; show only the total and you may get paid again for money you've already had.
I'd put the amount already paid on its own line between the two. The client can then check the arithmetic without opening the earlier invoice.
Short version: Take the lines, then the discount off the subtotal, then tax on what's left, then shipping, then anything already paid. Apply the same numbers in a different order and you get a different total.
Last updated 22 September 2026