Contractor invoice template: what to include, with examples

A contractor invoice is a bill that an independent contractor sends a client for labor, materials and any agreed deposit on a job. If you need to invoice a client today, the fields, the worked examples and the tax notes below give you a structure you can copy and send.

This guide covers the United States and the United Kingdom. It does not advise on your own tax position or on whether you count as self-employed.

What is a contractor invoice?

A contractor invoice is a request for payment from a self-employed person who provides services to another business or a client. The IRS describes a business owner or contractor who provides services to other businesses as generally self-employed. The invoice is how that person gets paid, and it doubles as the record the client uses to book the cost.

The IRS says the line between a contractor and an employee depends on the whole relationship, including behavioral control, financial control and the type of relationship. It states there is no "magic" or set number of factors that decides it. You can read the full test in the IRS guidance on independent contractors.

What should a contractor invoice include?

A contractor invoice should include every field GOV.UK lists for a standard invoice, plus job-specific lines. GOV.UK says every invoice needs the following, set out in its guidance on what invoices must include.

1. A unique identification number.
2. Your name or company name, address and contact information.
3. The customer's name and address.
4. A clear description of what you are charging for.
5. The supply date and the invoice date.
6. The amounts charged and the total owed.
7. The VAT amount, if applicable.

GOV.UK adds that sole traders must include their own name and any business name they use. For example, a plumber trading as "Reed Home Services" shows both names.

Contractors then add lines the general list does not cover:

Worked example: a US contractor invoice

A US contractor invoice shows labor, materials, the deposit and the balance. This example bills a bathroom refit in US dollars.

Sales tax on contractor work varies by state and by whether labor or materials are taxable. Check your state tax agency before adding a tax line.

How does a UK contractor invoice work under CIS?

Under the Construction Industry Scheme (CIS), a UK contractor deducts money from a subcontractor's payment and passes it to HMRC. GOV.UK states that a contractor must deduct 20 percent from registered subcontractors, and 30 percent if the subcontractor is not registered. Subcontractors with gross payment status have no deduction taken, according to the same GOV.UK CIS subcontractor guidance.

The deduction does not apply to the whole invoice. HMRC's guidance for contractors says to take away VAT and any materials the subcontractor paid for directly before working out the deduction, as set out in its guidance on making CIS deductions.

Consider a registered subcontractor who lays a patio. The invoice excludes VAT in this example.

The arithmetic is £3,000.00 minus the £480.00 deduction. GOV.UK says these deductions count as advance payments towards the subcontractor's tax and National Insurance bill. CIS also has its own VAT rules, so confirm them with HMRC before you invoice.

Invoqk can build a contractor invoice from a short job description, including a labor and materials split.

How do you invoice a contractor job step by step?

A contractor invoice takes seven steps from the quote to the final bill.

1. Start from the accepted quote and quote its reference number.
2. Number the invoice from a running sequence.
3. Enter the job address next to the client's billing address.
4. List labor and materials as separate lines.
5. Subtract any deposit or earlier stage payments.
6. State the balance, the due date and how to pay.
7. Send it the day the work is finished, not weeks later.

Not sure what a quote should look like first? The Quote template: what to include, with a free example covers the document that comes before the invoice. Trades in the same position can compare the What goes on an auto repair invoice? A free template guide, which also splits parts from labor.

Common contractor invoice mistakes

Why do contractor invoices get queried? Most queries trace back to a few gaps.

• Lump-sum pricing with no breakdown. The client cannot see what the labor cost.
• Forgetting the deposit. The client pays the full total and has to reclaim the overpayment.
• No job address. The accounts team cannot match the invoice to a project.
• No due date. A buyer without a date has no deadline.