Everhour supports billable tracking inside project tools, while this guide explains how to separate client charges from internal work.
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The calculation answers a practical billing question: which approved hours should be charged to the client, and which hours should remain visible for internal analysis only. Billable hours usually include contracted client delivery, approved meetings, production work, reviews, and other chargeable services. Non-billable hours include internal admin, sales work, training, rework written off by policy, and time excluded by contract.
The output is not just one total. You need billable hours, non-billable hours, billable amount, total worked hours, and sometimes the share of time that produced client revenue. That distinction matters when you review utilization, realization, collection, and effective billing rate. Worked time can be accurate while the invoice amount is wrong if non-billable entries are priced by mistake.
Start with classification, then apply rates. A time entry should answer four questions before it enters the billable total: who did the work, what task or matter it belongs to, whether the client agreement allows it to be billed, and whether the entry has been approved. Do not use the hourly rate as the classification rule. A senior person can perform non-billable work, and a junior person can perform billable work.
A common mistake is hiding non-billable time instead of tracking it separately. That makes the invoice cleaner but weakens margin analysis. If a project has 35 billable hours and 10 non-billable hours, the client sees only the 35 approved billable hours, but the business still spent 45 total hours. Keeping both figures lets you see whether scoping, approvals, or write-downs are reducing the return on delivery work.
The basic formula is billable hours multiplied by the applicable billing rate, summed across people, roles, tasks, or matters. For example, a client implementation includes 24 approved configuration hours at $140 per hour and 11 approved training hours at $95 per hour. The billable total is $3,360 plus $1,045, for a total of $4,405 before any jurisdiction-specific tax or invoice adjustment.
In the United States, there is no federal VAT/GST or national sales-tax rate for billed professional time. Sales tax treatment is state and local, and some services are not taxed. When a service is taxable, use the jurisdiction-specific tax input after the billable subtotal is calculated. Keep that tax input separate from the hour classification so non-billable work never enters the taxable billing base.
A one-off calculation is enough when you have a short list of approved entries, one client, known rates, and no later handoff beyond the invoice subtotal. It works well for checking a draft invoice, reviewing a small freelance project, or explaining the difference between worked hours and billed hours. The result should still separate billable time, non-billable time, rates, and adjustments.
A managed workflow is the better fit when people track time across projects, rates change by person or task, managers approve entries, or invoices move into accounting software. Everhour can embed tracking controls in supported project tools, sync project and task context, expose timesheets and budgets inside those workflows, and connect billing data to accounting tools so the split does not depend on reconstructed spreadsheets.
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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Billable time is approved work that the client agreement allows you to charge. It often includes delivery work, client meetings, research, implementation, review, and documented project communication. Non-billable time stays outside the client charge, even when it supports the same project, if the contract, policy, or approval process excludes it from billing.
Non-billable hours explain the gap between total effort and client revenue. If a team records only billable time, utilization and margin reports look better than the project actually performed. Tracking internal admin, sales support, training, and write-downs separately shows whether the issue is pricing, scope control, staffing, or approval discipline.
Yes. Split the time into separate entries when only part of the work is chargeable. For example, 3 hours of approved client configuration can be billable, while 2 hours spent fixing an internal setup mistake should be non-billable if policy or the client agreement excludes it. One blended entry makes the invoice harder to defend.
Billing rates affect the amount charged only after time is classified. A $200 hourly rate applied to non-billable work still produces $0 of client revenue because the work is excluded from billing. When different people or tasks have different rates, multiply each approved billable group by its own rate, then add the results.
No. U.S. tax treatment does not decide whether an hour is billable. The United States has no federal VAT/GST or national sales-tax rate for billed professional time, and state or local tax applies only when the service is taxable in that jurisdiction. Apply any required tax after the billable subtotal is known.
Everhour integrates with major project management and accounting tools, adds tracking controls inside supported workflows, and syncs project and task metadata into one time layer. Teams can mark time against the work they already manage, then keep billable and non-billable entries tied to the right project context.
Use embedded time tracking, billable flags, and synced project context before invoice review. Everhour keeps client billing data connected to daily work for cleaner handoffs.
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