How to Invoice as a Contractor

To invoice as a contractor, turn the signed quote into an invoice when the job is done. List each piece of labor and material, add any change orders the customer approved, apply sales tax the way your state requires, subtract any deposit, and show the balance and the due date. Send it before you leave, with a pay link.

Many invoicing guides are written for freelancers billing a company. This guide is for the electrician, plumber, painter or handyman billing a homeowner, where the deposit, the change orders and the state you work in all change what the invoice should say. The worked example near the end is a full invoice for one water heater job.

What a Contractor Invoice Should Include

A contractor invoice needs enough detail that the customer can check it against the quote they signed, and enough that you can find it again at tax time.

• Your business name, phone, email and address, plus your license number if you have one.
• The customer's name, the job address and how to reach them.
• An invoice number and the date you issued it. Number invoices in order and never reuse a number.
• The number of the quote the invoice came from.
• Labor and materials on separate lines, each with a quantity, a price and a line total.
• Each change order on its own line, with the date the customer approved it.
• The subtotal, the sales tax and the total.
• The deposit you already received, and the balance due.
• A due date written as a date, and the ways the customer can pay.
• A late fee, if you charge one and the signed quote says so.

1. Agree on the Price, Deposit and Due Date Before You Start

The invoice is easy when the quote did the hard part. Before any work starts, the customer should sign a quote that lists the work, the price, the deposit and when the rest is due. If you need one, the free quote and estimate maker builds a PDF quote with a deposit line and a signature line.

Check your state's deposit limit before you pick a number. California caps the down payment on a home improvement contract at $1,000 or 10% of the contract price, whichever is less, unless the contractor carries certain bonds.¹ Maryland bans any payment before the contract is signed and caps the deposit at one-third of the contract price.² Other states have their own rules, and your state's contractor licensing board is the place to look.

Write the due date in words the customer can't misread: “Balance due on completion” or “Due within 7 days of the invoice date.” A homeowner who signed that line in the quote expects the invoice when it arrives.

2. Get Extra Work Approved in Writing First

A lot of unpaid invoices start with work that was never written down. In one September 2026 thread on a handyman business forum, a commercial customer asked for added electrical work on the last day of a job, refused to sign a change order, and then refused to pay for the finished work.³

Before you do anything outside the quote, write a short change order: the extra work, its price, and the new job total. Get the customer's signature or a written yes by text or email, and date it. That change order then goes on the invoice as its own line, with the date. Write exclusions into the quote too. “Electrical by others” in the quote costs one line; leaving it out can cost the job's profit.

3. Build the Invoice From the Signed Quote

Copy the line items from the signed quote, so the customer sees the same numbers they agreed to. Keep labor and materials on separate lines, and give permits, disposal or trip charges their own lines if the quote listed them. A single line that says “work completed” gives the customer nothing to check and a reason to call with questions. On a small service call with no quote, list the trip charge, the hours and the parts on separate lines, and get the customer's OK on the price before you start.

The IRS does not ask for a special invoice format. Its recordkeeping page says that except in a few cases, the law does not require any special kind of records.⁴ A PDF you make yourself and an invoice sent from an app both work, as long as each one shows what you charged and what was paid.

4. Charge Sales Tax the Way Your State Does

Sales tax on contractor work changes from state to state, and labor is one of the biggest differences. In Texas, labor to repair, remodel or restore a home is not taxable, and on a contract that lists materials separately, the contractor collects sales tax on the materials.⁵ In Washington, retail sales tax on construction covers permits and other fees, labor, profit, materials and subcontractors.⁶ The same job can carry a very different tax line two states apart.

Read your state revenue department's guide for contractors, and ask your accountant when a job mixes repair and new construction. This section is a starting point, not tax advice. If only some lines are taxable where you work, mark which ones on the invoice so the customer can see why the tax is what it is.

5. Credit the Deposit and Show the Balance Due

Show the deposit as a payment against the total, with the date you received it, so the invoice ends in one clear number: the balance due. A customer who paid $600 three weeks ago should see that $600 on the invoice instead of having to remember it. If you bill a big job in parts, tie each payment to something both of you can see, like “permit issued” or “rough-in passed inspection”, and list the payments already made on every invoice.

6. Send It Before You Leave the Job

The best time to send an invoice is while you are still in the driveway. The work is fresh, the customer can see it, and paying takes a minute on their phone when the invoice has a pay link. As of September 2026, 31% of invoices sent through Invoice Goat are paid in under 24 hours.⁷

Send the invoice on its own, by email or text, with the invoice number, the amount and the due date at the top. Give the customer more than one way to pay: a link for a card or bank transfer, plus check or cash if you take them.

7. Follow Up on a Schedule

Late payment is common. Intuit QuickBooks' 2026 late payments report, based on its surveys of small business owners, found that 59% of businesses had invoices overdue by 30 days or more.⁸ A follow-up plan you use every time takes the awkwardness out of asking:

• The day after the due date, send a short, friendly reminder with the invoice link.
• A week later, call.
• After that, send a final written notice with the amount, the original due date and what happens next.

If a job might end in a lien, know your state's deadlines before the job starts, because some of them run from the first day of work. In California, subcontractors and suppliers have to give a preliminary notice within 20 days of first furnishing work to keep their full lien rights, while a contractor hired directly by the owner gives that notice only to the construction lender, if there is one.⁹

8. Keep a Copy of Every Invoice

The IRS lists invoices among the documents that back up the income on your tax return, and in the general case it says to keep records for three years.¹⁰ Keep the signed quote and any change orders with each invoice, so the whole job is in one place if a customer disputes it.

A Worked Example: Water Heater Replacement

Here is a full invoice for a plumber replacing a gas water heater for a homeowner, in a state that taxes materials but not repair labor. The customer signed the quote on September 29 and paid a $600 deposit. During the job, the plumber found a corroded main shutoff valve. The homeowner approved replacing it by text on October 3, so it appears as a change order.

The math: the taxed lines are the heater ($1,150), the fittings ($185) and the valve ($45), which add up to $1,380. At an example rate of 8.25%, the tax is $113.85. The subtotal of all six lines is $2,040, so the total is $2,153.85, and after the $600 deposit the customer owes $1,553.85.

The notes at the bottom of this invoice would say: “Balance due on receipt. Pay by card or bank transfer with the link in this message, or by check to [your business name]. Thank you for your business.”

One state rule changes this job. In California, the deposit on a home improvement contract this size could be no more than about $200, because 10% of the contract price is less than $1,000.¹ A $600 deposit would be over the limit there.

If You Bill a Company Instead

Billing a business as an independent contractor changes a few things. List the dates you worked and either the hours and your rate or the fixed fee. Put the client's purchase order number on the invoice if they use one, and send it to the person who pays the bills as well as the person who hired you. Expect the client to ask for a Form W-9, which gives them your taxpayer identification number for the information return they file with the IRS.¹¹ Business clients often pay on their own schedule, so agree on the due date in writing before you start.

Mistakes That Slow Down Payment

• Starting work without a signed quote and a deposit.
• Doing extra work on a spoken yes.
• One line that says “work completed” and a total.
• Waiting until the end of the week to send invoices.
• A due date the customer has to work out, instead of a date on the page.
• A mailed check as the only way to pay.
• Never following up after the due date.

A clear invoice won't make every customer pay on time. Some commercial customers pay on their own calendar whatever the paperwork says, and once the work is done you have little left to bargain with. On those jobs, protect yourself before you start: a deposit, payments tied to milestones, and terms signed in the quote. The invoice then collects what the quote already settled.

Doing This in Invoice Goat

Invoice Goat is a quote and invoice app for contractors and trades that runs in any phone browser.

• On a signed quote, Convert to Invoice opens a new invoice filled in from the quote.
• Sales tax can be turned off line by line, so labor can stay untaxed while materials are taxed.
• Invoice Goat has no deposit request on quotes. When the deposit comes in, record it on the invoice with Add Payment, and the invoice shows the amount paid and the amount due.
• Save & Send emails the invoice, and Copy link gives you a link to paste into a text. If you turn on online payments, the customer pays by card or bank transfer from that page.
• The invoice history shows when the customer viewed it. Invoice Goat does not send payment reminders for you, so the follow-up in step 7 is yours to send.

One price covers every feature. See Invoice Goat pricing.

Questions

Sources and Dates

1. California Business and Professions Code section 7159.5(a)(3), home improvement contracts: the down payment may not exceed $1,000 or 10 percent of the contract amount, whichever is less. Section 7159.5(a)(8) exempts contractors who furnish certain performance and payment bonds or approved equivalents. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC&sectionNum=7159.5 Read October 5, 2026.
2. Maryland Code, Business Regulation section 8-617: no payment before the home improvement contract is signed, and a deposit of no more than one-third of the contract price. https://mgaleg.maryland.gov/mgawebsite/laws/StatuteText?article=gbr&section=8-617 Read October 5, 2026.
3. r/HandymanBusiness thread, September 20, 2026: added electrical work on the last day of a job, a change order refused, then payment refused. https://www.reddit.com/r/HandymanBusiness/comments/1wlijnb/extra_work_no_pay/ Read October 5, 2026.
4. IRS, Recordkeeping: "Except in a few cases, the law does not require any special kind of records." https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping Read October 5, 2026.
5. Texas Comptroller, publication 94-116, Real Property Repair and Remodeling: labor to repair, remodel or restore residential real property is not taxable; on a separated contract the contractor collects tax on the materials. https://comptroller.texas.gov/taxes/publications/94-116.php Read October 5, 2026.
6. Washington Department of Revenue, Construction industry guide: the taxable amount includes charges for permits and other fees, labor, profit, materials and subcontractors. https://dor.wa.gov/education/industry-guides/construction/overview Read October 5, 2026.
7. Invoice Goat, figures given by founder Jeff Burt, as of September 2026: share of invoices sent through Invoice Goat that were paid in under 24 hours. Totals across all accounts. Read October 5, 2026.
8. Intuit QuickBooks, Small Business Late Payments Report 2026, published July 7, 2026, from Intuit QuickBooks surveys of small business owners: 59% of businesses have invoices overdue by 30 days or more, up from 47% the year before. https://quickbooks.intuit.com/r/small-business-data/small-business-late-payments-report-2026/ Read October 5, 2026.
9. California Civil Code sections 8200 and 8204: preliminary notice within 20 days of first furnishing work; a claimant with a direct contract with the owner gives it only to the construction lender, if any. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=8204 Read October 5, 2026.
10. IRS, What kind of records should I keep (invoices are listed among the documents for gross receipts), and How long should I keep records (3 years in the general case). https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records Read October 5, 2026.
11. IRS, About Form W-9: used to give your correct taxpayer identification number to a person who must file an information return with the IRS. https://www.irs.gov/forms-pubs/about-form-w-9 Read October 5, 2026.