Been doing some consulting work lately and realized I’m mixing taxable design services with non-taxable strategy sessions on the same invoice.
Getting confused about how to break this down properly. Currently just lumping everything together, which probably isn’t right. I wonder if others deal with this same headache when billing different types of work.
I just put everything on one invoice but break it into sections. Tax only gets added to the stuff that needs it.
Two separate invoices work better than trying to sort it out on one. I send taxable services on one invoice and non-taxable on another. Keeps my bookkeeper happy and makes quarterly tax filing dead simple. When the state comes knocking they want clean records, not line items they have to decode. Yeah it means two invoices instead of one, but your accountant will thank you later when everything adds up clean.
I just use different invoice numbers for each type of work. Keeps the paperwork separate from day one.
Taxable stuff gets one invoice series, non-taxable gets another. Way easier when you need to pull records later or if you get audited.
No confusion about which line item is what, and your tax calculations stay simple.
I just write what each job was right on the invoice.
Yeah, mixing those on one invoice is gonna bite you later when tax time comes around.
I create separate line items for each type of work:
Most invoicing software lets you mark individual line items as taxable or not. Makes the math automatic and keeps everything clean for your records.
The key is being super clear about what gets taxed so your client isn’t surprised and you don’t mess up your books later.
I learned this the hard way after getting a notice from the state tax office a few years back.
What I do now is put both services on the same invoice but make it super obvious which is which. I have a section that says “Taxable Services” and list all my design work there. Then below that I add “Non-Taxable Services” and put the strategy stuff.
At the bottom, I only apply tax to the taxable section total. Then I add both sections together for the final amount.
Keeps it simple for the client since they get one invoice, but my accounting stays clean. The state auditor who reviewed my books said this format was exactly what they wanted to see.
Just make sure you know what your state considers taxable. Some places tax consulting too, so double check your local rules.