Should I charge tax on labor or only on materials?

Depends on your state. Materials are taxable in nearly every state. Labor is taxable in some (Connecticut, Texas, Pennsylvania on certain services) and exempt in others (California, most New England). The safe move: check your state department of revenue's contractor guidance, and when in doubt, ask your CPA before your first commercial job.

How do I invoice for a change order on a fixed-price job?

List the original fixed-price line as "Original scope per contract — $X,XXX" and add a separate "Change order #1: [description]" line with its own price. Don't roll the change into the base price — that hides it and creates a dispute when the customer compares your invoice to the original bid. Reference any signed change-order paperwork on the invoice.

What's the right payment term for residential vs. commercial?

Residential: Due on Receipt or Net 7, paid by card or check at the kitchen table. Commercial: Net 30 is standard; some large GCs push for Net 60 or Net 90 — push back politely or build the cost of capital into your bid. Property managers usually pay Net 30 like commercial, even on a single-unit job.

How do I handle retainage on commercial contractor invoices?

Show retainage as a negative line at the bottom of the invoice: "Retainage held (10%) — $-X,XXX". The GC then pays the invoice subtotal minus retainage and holds the retainage until project completion. Track retainage separately so you can invoice for the release at end of job — that's its own invoice, not a markup on a regular bill.

How do I invoice for subcontractors I hired to complete a job?

List your subcontractor costs as a pass-through line: "Subcontractor — electrical rough-in (ABC Electric) — $1,200." Whether you bill this at cost or with a markup depends on your prime contract. If you're marking up subcontractor work, state it as a separate management/markup line rather than inflating the sub cost — it's cleaner on audit and harder to dispute. Get your sub's invoice before you invoice the GC so the dollar amounts match.

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INVOICE

Invoice #: INV-001

From:

Lawson Trade Services

Bill To:

Date: May 17, 2026

Terms: Due on Receipt

Description	Qty	Price	Total
Labor — Master plumber, 8 hours @ $95/hr	8	$95.00	$760.00
Materials — Pex piping, fittings, valves	1	$425.00	$425.00
Permit fee — City of Portland	1	$85.00	$85.00

Subtotal:$1,270.00

Total:$1,270.00

INVOICE

Invoice #: INV-001

From:

Lawson Trade Services

Bill To:

Date: May 17, 2026

Terms: Due on Receipt

Description	Qty	Price	Total
Labor — Master plumber, 8 hours @ $95/hr	8	$95.00	$760.00
Materials — Pex piping, fittings, valves	1	$425.00	$425.00
Permit fee — City of Portland	1	$85.00	$85.00

Subtotal:$1,270.00

Total:$1,270.00

Overview

A contractor invoice is what a tradesperson sends a homeowner or general contractor to bill for labor, materials, and permits on a completed job. An independent contractor invoice separates labor hours at your shop rate, materials at cost (or with markup), and any permit or disposal fees — so the customer can see what they're paying for and so you can defend the line items if asked.

Step-by-step

How to invoice as a contractor

Match the invoice to the work order or PO

Use the same job number your customer issued — INV-{Job#}-001. Property managers and GCs match every invoice against an open PO; if your invoice number doesn't map, it goes to "research" and you wait three weeks.

Itemize labor separately from materials

Two distinct line groups: "Labor — Master plumber, 8 hours @ $95/hr" then "Materials — PEX piping, fittings, valves." Customers contest combined "labor + materials" lines. Split rows pay faster.

List permits, disposal, and call-out fees explicitly

A "Permit fee — City of Portland — $85" line removes the "Why is the bill $85 over the estimate?" call. Same for dump fees, after-hours surcharges, and travel time on jobs outside your normal service area.

Mark materials cost vs. markup clearly

Whether you bill materials at cost or with markup is a contract decision — but show what you're doing. "Materials (at cost +15%)" or "Materials (pass-through)" sets expectations and prevents post-job disputes.

Set Due on Receipt for residential, Net 30 for commercial

Homeowners pay when they have the invoice in hand (Due on Receipt + credit card processing). Commercial GCs need 30 days for their AP cycle. Mixing them up gets you ghosted on residential or unpaid on commercial.

What to include

What every contractor invoice should include

Job number, work order, or PO number from the customer

Property address where the work was performed (not just the billing address)

License number and state — required for paid invoices in most jurisdictions

Labor lines broken out by trade and hourly rate

Materials at cost or with explicit markup percentage

Permit fees, disposal fees, and any after-hours surcharges as their own lines

Sales tax on materials (and labor in states that tax it)

Payment terms — Due on Receipt for residential, Net 30 for commercial

Late fee policy (1.5%/mo is the legal max in most states)

A photo or punch-list reference if the work involved milestone signoffs

Watch out

Common contractor invoicing mistakes

Lumping labor + materials into one line. Customers contest it; AP teams kick it back. Split.

Skipping the license number. In CA, FL, and several other states, an invoice without a license number is legally non-collectable.

Forgetting to charge sales tax on materials. The state catches you on audit — and your customer often won't reimburse retroactively.

No PO match. Without the job's PO number on the invoice, commercial AP routes it to "needs research" and you wait.

Inconsistent rates. If your bid said $95/hr and the invoice shows $110/hr, you're inviting a payment hold even if the change is legitimate.

Common questions

Frequently asked questions.

In most US states with licensing boards (CA, FL, TX, AZ, NV among others), yes — an invoice without the license number is technically not collectable in court, and some jurisdictions fine the contractor for omitting it. Even where it's not required, listing your license + bond + insurance number on every invoice signals professionalism and reduces dispute calls.

Why PrimeBase

Why contractors move from paper invoices to PrimeBase

A clean PDF invoice gets you paid for this job. PrimeBase keeps every homeowner and GC in the CRM with every estimate, signed change order, and invoice on the same record — and the next invoice is a one-click conversion from the accepted estimate, so permit-fee pass-throughs and labor-plus-materials line items carry over cleanly. AR aging surfaces the slow-pay accounts, and customers see signed docs and invoices in their branded portal.

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Free contractor invoice template. Labor, materials, done.

Invoice Generator

Invoice Details

INVOICE

From:

Bill To:

INVOICE

From:

Bill To:

How to invoice as a contractor

What every contractor invoice should include

Common contractor invoicing mistakes

Frequently asked questions.

Why contractors move from paper invoices to PrimeBase

Related tools and templates.