Everhour tracks project time for billing, while invoice totals still need clean rates, write-downs, and tax inputs.
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This calculation answers how much a client invoice should show after billable hours are priced at the agreed rates. It is most useful when you have time entries from different people, tasks, or projects and need one clean pre-tax or post-tax total. The starting point is not all worked time. It is the time that is approved, billable, and allowed under the client agreement.
For U.S. work, totals are normally shown in U.S. dollars. The United States has no federal VAT/GST or national sales-tax rate for billed professional time, so tax is not a universal line item. If the service is taxable, the tax input must match the state and local rule for that service and location.
The core formula is billable hours multiplied by the applicable billable rate, summed across each rate group. Then subtract write-downs or discounts, add billable expenses if they belong on the invoice, and apply any jurisdiction-specific tax when the service is taxable. Do not average rates unless the contract uses a blended rate.
For example, an invoice includes 18 approved billable hours from a project lead at $160 per hour and 7 approved billable hours from a coordinator at $120 per hour. The pre-tax total is $3,720. If the service is taxable at 8.25%, the tax is $306.90 and the invoice total is $4,026.90.
A common mistake is treating every tracked hour as invoiceable. Billable hours are the approved hours the client can be charged for. Billed hours are the hours that actually appear on the invoice after write-downs, excluded tasks, fixed-fee limits, or partner review. If 30 hours were worked but 4 were written off, the invoice calculation uses 26 billed hours.
Tax is another separate input. Texas taxes taxable services at a 6.25% state sales and use tax rate, with local jurisdictions able to add up to 2% for an 8.25% maximum combined rate. New Mexico gross receipts tax on services varies by business location from 5.125% to 8.6875%. Hawaii uses general excise tax, not sales tax.
A one-off calculation is enough when you have a small number of approved entries, one or two rates, no disputed time, and a tax treatment you already know. It gives you a fast invoice check before sending a draft, reviewing a write-down, or comparing the client total against a budget.
A managed workflow is better when entries arrive from multiple people, invoices need approval, or rates vary by project, member, or task. Everhour Time Tracking captures task and project hours through timers or manual entries, works inside common project tools, and feeds timesheets, reporting, budgeting, invoicing, and payroll review before billing leaves the team.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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You need approved billable hours, the billable rate for each person or task, any write-downs or discounts, billable expenses, and the tax treatment for the client location and service. For U.S. invoices, do not add a federal VAT/GST line because the United States has no federal VAT/GST.
Apply tax to the taxable invoice amount after write-downs or discounts, unless the client contract or tax rule requires a different base. The invoice should price the amount actually billed, not the larger internal value of the time worked. State and local taxability must be checked before adding any tax line.
Worked hours are all time spent on the project. Billable hours are the approved hours the client can be charged for. Invoiced hours are the hours included on a specific invoice. The invoiced amount can be lower than billable value when time is written down, excluded, capped, or moved to a later invoice.
Calculate each rate group separately, then add the subtotals. For example, partner time, analyst time, and project management time should each use the rate assigned to that role, person, or task. Averaging the rates changes the invoice unless the client agreement explicitly uses a blended rate.
Payment timing matters when late-payment terms, discount terms, or public-sector rules apply. For federal-agency vendor invoices, Prompt Payment rules generally use the contract date, accepted discount terms, an accelerated-payment rule, or 30 calendar days after receipt of a proper invoice. That rule does not create a universal private-client due date.
Everhour Time Tracking captures task and project hours with live timers or manual entries, then feeds approved timesheets, reports, budgets, invoicing, and payroll review. Admin controls include approvals, locked periods, reminders, timer behavior settings, and automatic timer stop rules.
Everhour lets admins set project billing status, mark specific tasks as non-billable inside billable projects, and report on Billable Time, Non-Billable Time, Billable Amount, and Cost. That keeps internal work visible while excluding non-billable entries from client-facing totals.
Track billable entries as work happens, approve the timesheet, and send clean totals into billing. Everhour gives teams a time-tracking workflow that supports invoice-ready records.
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