Recently landed a big project requiring a 50% upfront payment. Never dealt with this before. Unsure how to structure the invoice - should I split it into two or include the full amount with a partial payment note?
Worried about potential tax implications too. Anyone have experience with this?
Nah, I wouldn’t split it. Just make one invoice for the full amount and mark half as paid. Keeps things simple. Tax stuff? No clue, but your accountant should know.
I’ve been in this boat a few times. Here’s what works for me:
I create one invoice for the full amount. At the top, I clearly state ‘50% advance payment required’. Then I list all the project details and the total.
At the bottom, I add a section that shows:
Total amount
Advance payment received (50%)
Balance due
This way, everything’s on one document. The client sees what they’ve paid and what’s left.
For taxes, I only report the income when I actually get paid. So for that first 50%, I count it in the month I receive it. The rest goes on the books when the client pays the balance.
Always keep good records. I learned that the hard way when I messed up my taxes one year. Not fun explaining that to the IRS!