Everhour supports billable rates and reporting, while client invoices still need clean hours, rates, write-downs, and tax inputs.
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The calculation answers a direct billing question: how much should a client be charged for approved billable work before payment collection. You need billable hours, the billing rate for each person, project, task, or service category, and any write-down that reduces the invoice. In the United States, billable-hour totals are normally denominated in U.S. dollars.
This is not the same as total work time. Internal meetings, admin cleanup, training, and non-billable project management can stay in utilization reports without increasing the client amount. For U.S. invoices, there is no federal VAT/GST or national sales-tax rate for billed professional time, so any tax input must come from the applicable state and local treatment when the service is taxable.
Start from approved billable entries, not every time entry in the project. A client invoice should exclude non-billable tasks, rejected time, and work that the agreement treats as included in a fixed fee. If a rate changed during the period, split the entries by date so older work keeps the rate that applied when the work was performed or approved.
The common mistake is using one blended rate when the client agreement prices different work differently. A senior consultant, implementation specialist, and support analyst can all work on the same client, but each line needs its own rate if the engagement letter, statement of work, or contract uses role-based pricing. Keep write-downs separate so billed time, worked time, and revenue remain traceable.
The basic formula is billable hours × billing rate = pre-tax billable amount. When a client has multiple rates, calculate each line first, then add the line totals. For example, a strategy project includes 18 approved advisory hours at $190 per hour and 27 approved production hours at $115 per hour.
The advisory line is $3,420, and the production line is $3,105, so the pre-tax client billing total is $6,525. If you apply a $325 write-down, the invoice subtotal becomes $6,200 before any applicable state or local tax. Do not add a U.S. federal VAT/GST line, because that tax does not exist.
A one-off calculation is enough when you have a short time log, one client, clear approved hours, and no rate changes inside the billing period. It also works for a quick invoice check before sending a draft to accounting. The result should still match the contract, engagement letter, or billing policy that governs the client relationship.
A managed workflow becomes necessary when several people track time, rates vary by project or task, approvals happen before billing, or invoices need a repeatable handoff. Everhour can support that workflow by keeping cost and billable rates separate, applying per-person defaults or per-project overrides, preserving dated rate history, and pricing work by project, member, or task.
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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Multiply each approved billable time line by its billing rate, then add the line totals. If the invoice includes a write-down, subtract it after the pre-tax billable amount is calculated. Add state or local tax only when the service is taxable in the relevant jurisdiction; the United States has no federal VAT/GST or national sales-tax rate.
Worked time is all time recorded for the project. Client-billed time is the portion approved for invoicing under the contract, engagement letter, or billing policy. Non-billable tasks, rejected entries, included fixed-fee work, and write-downs explain why client-billed time or revenue can be lower than total work time.
Split a rate change when work in the billing period falls on both sides of the effective date. Hours before the change use the old rate, and hours on or after the change use the new rate. This keeps the invoice consistent with dated rate history and prevents one rate from repricing the entire period incorrectly.
No. The United States has no federal VAT/GST or single national sales-tax rate. Sales tax and similar taxes are state and local, and the treatment of services varies by jurisdiction. Use a jurisdiction-specific tax input only when the billed service is taxable for that client and location.
For U.S. lawyers, ABA Model Rule 1.5 requires the scope of representation and the basis or rate of fees and expenses to be communicated in writing for new client-lawyer relationships, subject to the rule's limited low-cost exception. The billing calculation should follow that written rate basis.
Everhour separates cost and billable rates, so internal labor cost and client-facing revenue stay distinct. Admins can set per-person defaults, override rates by project, preserve dated rate history, and price billable work by project, member, or custom task rate.
Everhour Billing & Invoicing turns tracked billable time and expenses into invoices, calculates amounts from rates and billable time, and excludes non-billable work. Invoices can be exported to QuickBooks Online, Xero, or FreshBooks as drafts, with invoice status synced back to Everhour.
Keep rates, approvals, and invoice amounts connected. Everhour applies billable-rate rules to tracked time so client billing stays consistent from approved hours to invoice-ready totals.
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