When you set a price on an invoice, tax can work in one of two ways: the price already includes tax, or tax is added on top. You pick which one fits your market, once, in your firm's settings. This guide walks you through it from login.
Set how tax works on your prices
- Log in to your workspace.
- In the left menu, under Admin, click Settings.
- Find Tax on prices and choose your option.
The two options
- Tax added on top (exclusive). The price you type is before tax. On the invoice, tax is worked out and added, so the total is higher than the price you entered. This is common for business-to-business work.
- Prices include tax (inclusive). The price you type already has tax inside it. On the invoice, the same total is shown, with the tax part broken out so it is clear how much of the price is tax. This is common for retail and consumer prices.
Either way, the tax is calculated for you and shown clearly on the invoice, and your books record the correct tax amount.
Which should I choose?
- If you quote clients a price and then add tax, choose tax added on top.
- If the price you tell clients is the final price they pay, tax included, choose prices include tax.
Note
This setting applies to how new invoices are worked out. Existing invoices are not changed. See Your firm's settings for the other options on that page.