True for all contracting work, your individual terms should be included on your invoice in addition to your general rates. An invoice template for an independent contractor who provides multiple aspects in their service might include a breakdown of their charging process. For example, they may charge a specific hourly rate as well as a separate charge for material needed to complete the service. As a general rule, you will want to be as clear and detailed as possible when preparing your invoice.
Standard contractor invoice format should include a place for:
- Your name or the name of your company
- Your client’s name
- Invoice number and/or work order number
- The date or duration you’re providing your services
- For labor costs, a description of your services rendered
- For flat rate: Dollar amount for cost of labor
- For hourly rate: Quantity of hours spent performing work and dollar amount per hour for cost of labor
- Total amount for cost of labor
- For cost of materials, a description of each material used
- Quantity of materials
- Cost per unit of materials
- Total amount for cost of materials
- Miscellaneous charges, a description, quantity, and cost for these items (if applicable)
- The total price you’re charging, including applicable tax
As an independent contractor, your taxes are not automatically deducted by your employer to comply with federal, state, and city tax requirements. It’s important to remember that, at the end of each year when you fill out a 1099 form, you will be responsible for paying those taxes to the IRS. By making sure to include a line item for any applicable taxes, you guard yourself against withholding too little from your income and being unable to pay your federal, state, and city taxes.
Remember to set aside at least 30% of your income to pay your taxes. Rates may vary according to state (and some) cities, but you will thank yourself later when you’re able to easily cut a check to the IRS to pay your taxes instead of dipping into your hard-won profits and savings to do so. Additionally, consider making quarterly payments to the IRS to avoid having to pay your taxes all at once when tax season rolls around.