How an invoice total is worked out
The same four numbers give different totals depending on what is applied to what. This is the order that produces the figure a client will recognise, and why each step sits where it does.
How the total is worked out
The order matters, because the same four numbers produce different totals depending on what is applied to what. This is the order the invoice calculator and the invoice editor on this site both use:
| Subtotal | Every line, quantity multiplied by unit price |
|---|---|
| Discount | Taken off the subtotal, never off the tax |
| Taxable amount | Subtotal minus the discount |
| Tax | Charged on the taxable amount, so a discount reduces the tax with it |
| Total | Taxable amount, plus tax, plus shipping |
| Balance due | Total minus whatever has already been paid |
Shipping is added after tax rather than before it. That is the simpler of the two readings and the one most invoicing tools use, but it is not universal: where a jurisdiction treats delivery as part of the taxable supply, the tax figure this site works out will be lower than the one your tax authority expects. Check the rule that applies to you before sending the invoice.
Tax-inclusive and tax-exclusive prices
Prices already include tax when the figures you quoted are what the client pays. That is a setting on the calculator and a decision on a real invoice. The tax is then extracted from the total rather than added to it, so the total does not move when you change the rate — only the tax line does. Leave it unticked and the tax is added on top, which is the usual practice for business-to-business invoicing in most of Europe and North America.
The arithmetic differs and the difference is easy to miss. On 1,000 at 10 per cent, exclusive tax is 100 and the total is 1,100; inclusive tax is 90.91 and the total stays at 1,000.
Rounding, and why the currency matters
Every figure is held as a whole number of the currency's smallest unit — cents, yen, rupiah — and only turned back into a decimal when it is displayed. That is what keeps subtotal minus discount plus tax equal to the total exactly, rather than out by a cent after a long list of lines.
The consequence is visible when you switch currency in the calculator or the editor. The Japanese yen and the Indonesian rupiah have no sub-unit, so a price of 1,500.75 becomes 1,501 as soon as you pick one of them, and what you are actually charging is the rounded figure rather than the one you typed. The Kuwaiti dinar has three decimal places rather than two, and rounds to those.
A percentage discount and a fixed one are not interchangeable
Ten per cent off a 2,400 invoice and “240 off” produce the same figure today and stop agreeing the moment anything else moves. Add a line, and the percentage follows the invoice while the fixed amount stays where it was. Neither behaviour is wrong; they answer different promises.
A percentage is the right form when what you agreed was a proportion — a standing discount, a volume arrangement. A fixed amount is right when what you agreed was a sum — a goodwill credit, a correction for something that went wrong. Choosing the form that matches the promise means the invoice still says what you meant after it is edited.
Where shipping sits, and why it is after the tax on this site
Shipping is added after tax on this site, which is a decision rather than a law: in some places delivery is taxable at the same rate as what is being delivered, in others it is not, and in others it depends on what is in the box. Putting it after the tax means the figure you enter is the figure that appears, and nothing is silently taxed that you did not ask to be taxed.
If delivery is taxable where you invoice, the way to say so is to put it in as a line item rather than in the shipping field. It then sits inside the subtotal and is taxed with everything else, which is what you wanted, and the document shows why.
The balance is not the total
An invoice that follows a deposit has two numbers worth printing: what the work came to, and what is still owed. Showing only the balance invites the question of what the full price was; showing only the total invites a payment for money you have already had.
Print both, with the amount already paid as its own line between them. The client can then check the arithmetic without opening the earlier invoice, which is the whole point of putting it there.
Short version: Work it out in this order: the lines, then the discount off the subtotal, then tax on what is left, then shipping, then take off anything already paid. The same numbers applied in a different order give a different total.
Last updated 22 September 2026