Annual billing capacity starts with available work time, billable expectations, and rates. Everhour turns approved billable time into invoice-ready totals.
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This calculation answers three practical questions: how many hours you can bill in a year, what those hours are worth at a stated rate, and whether the target fits your actual work pattern. It is useful for annual quotas, freelancer revenue planning, law firm targets, agency staffing, and client budget checks. The starting point is not 52 full weeks of billable work; it is the number of working weeks left after planned time away.
The result is not the same as total hours worked. Billable hours are client-chargeable hours after excluding admin, sales, training, internal meetings, write-downs, and non-billable project work. For billing analysis, keep four figures separate: utilization measures billable time against available work time, realization compares billed value with recorded billable value, collection tracks paid invoices against billed invoices, and effective billing rate shows revenue divided by total work time.
The cleanest annual estimate is working weeks multiplied by expected billable hours per week. A full calendar year has 52 weeks, but PTO, holidays, sick time, conferences, and shutdowns reduce capacity. If you plan 4 non-working weeks, use 48 working weeks. Then choose a weekly billable target that leaves room for non-billable work instead of assuming every work hour becomes client revenue.
For example, 48 working weeks at 35 billable hours per week equals 1,680 annual billable hours. At $140 per hour, that produces $235,200 before taxes, write-downs, expenses, or collections. If the same person works 40 hours per week for those 48 weeks, total work time is 1,920 hours, and utilization is 87.5%. That distinction prevents a revenue target from silently assuming impossible billability.
The core formula is annual billable hours × hourly rate = gross billable value. If the work uses different rates, calculate each rate group separately and add the results. If time is rounded, apply the billing increment before multiplying by the rate. Common increments include 0.1 hour, which is 6 minutes, and 0.25 hour, which is 15 minutes.
The common mistake is treating gross billable value as collected revenue. Write-downs reduce billed time or billed amount before the invoice goes out. Unpaid invoices reduce collections after billing. U.S. tax treatment also needs a jurisdiction-specific input when the service is taxable. The United States has no federal VAT/GST or single national sales-tax rate for billed professional time; state and local rules decide whether a service is taxable.
A one-off calculation is enough when you need a planning number: annual target hours, expected revenue at one rate, or a quick comparison between two workloads. It also works for solo estimates before a contract is signed. For U.S. lawyers, the basis or rate of fees and expenses must be communicated in writing for new client-lawyer relationships under ABA Model Rule 1.5, subject to the rule's limited low-cost exception.
A managed workflow is needed when entries must move from capture to approval to invoice without rebuilding the math. That means preserving billable and non-billable flags, rate choices, write-down decisions, expenses, client defaults, and invoice status. Everhour Billing & Invoicing converts tracked billable time and expenses into invoices, excludes non-billable work, and exports invoices to QuickBooks Online, Xero, or FreshBooks.
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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Start with working weeks, not calendar weeks. Subtract planned PTO, holidays, firm closures, and other non-working time from 52 weeks. Then multiply the remaining weeks by a realistic weekly billable target. For example, 46 working weeks at 30 billable hours per week equals 1,380 annual billable hours.
A realistic target depends on role, firm model, and how much non-billable work the person owns. A target based on 40 billable hours every week assumes no admin, sales, supervision, training, internal meetings, or write-downs. Most planning models work better when they separate total work capacity from billable capacity.
No. Billable hours are time entries eligible to charge to a client. Billed hours are the hours that actually appear on an invoice after review, rounding, exclusions, and write-downs. A person can record 1,700 billable hours and still invoice fewer hours if a manager removes or discounts time.
Keep tax separate from the billable-hour value unless you are calculating the final invoice amount. In the United States, there is no federal VAT/GST or national sales-tax rate for professional time. State and local rules decide whether a specific service is taxable and what rate applies.
Annual billing value is hours multiplied by rates, usually before invoice adjustments and payment timing. Cash collected depends on issued invoices, client payment behavior, disputes, credits, and write-offs. For federal-agency vendor invoices, Prompt Payment rules generally use a 30-calendar-day due date after receipt of a proper invoice unless another listed term applies.
Everhour Billing & Invoicing converts tracked billable time and expenses into invoices, calculates invoice amounts from rates, and excludes non-billable tasks. Invoice data can be grouped by project, task, person, date, or another available breakdown before export to QuickBooks Online, Xero, or FreshBooks.
Everhour Reporting shows billable time, non-billable time, billable amount, cost, revenue, and project profitability in configurable reports. Teams can group and filter the data by member, task, project, client, and date range to compare annual targets with approved time.
Track approved billable work, keep non-billable time out of invoices, and send clean billing totals to accounting. Everhour connects annual capacity planning to invoice-ready client billing.
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