How to invoice as a freelancer: billing, deposits, fees and tax

What a freelance invoice needs

A freelance invoice has the same core parts as any business invoice, plus a few details that matter more when you work alone. The client is often paying a person rather than a company, and their accounts team needs enough to match your invoice to a contract or purchase order.

• Your name or business name, address, email and, if you have one, your business registration or tax ID where your country requires it.
• The client’s business name and the person or department who approves invoices.
• A unique invoice number in a steady sequence, the invoice date and the due date.
• The client’s purchase order or project reference, if they gave you one.
• A line for each piece of work: hours and rate, a project stage, or the retainer period.
• Any reimbursable expenses on separate lines, the total, any deposit already paid, and the balance due.
• How to pay you: bank details, a payment link, or both, and your payment terms in words.

Hourly, project and retainer invoicing

Most freelancers bill in one of three ways, and each needs a slightly different invoice. Hourly billing shows hours times rate, ideally with dates or tasks so the client can check them. Project billing shows the agreed price, often split into a deposit and later payments. A retainer is a fixed monthly fee for a set amount of work or availability, with any extra hours billed on top at an agreed rate.

Here is one designer charging $85 an hour, invoicing three clients in the same month.

• Hourly: keep a time log and attach or summarize it. Round to the nearest quarter hour, or whatever increment you agreed.
• Retainer: say whether unused hours roll over. Most retainers state that they do not, and the invoice should show the period it covers.
• If you are not sure what rate to charge in the first place, work back from the income you need with our freelance rate calculator.

Deposits and milestone invoices

A deposit protects you from doing a month of work for a client who never pays. It also shows the client is committed. Ask for it in your quote, invoice it before you start, and do not begin until it has cleared.

For the $4,800 website above, the first invoice asks for $2,400 before work begins. The final invoice lists the full $4,800 project, shows the $2,400 deposit as already paid, and asks for the $2,400 balance. That way the client’s records show the whole job on one document.

For longer projects, split the price into milestones tied to things the client can see: 30% to start, 40% on design approval and 30% on launch, for example. Each milestone invoice names the stage and its share of the total. If a client stalls on approving a stage, your contract should say when that milestone becomes payable anyway.

Expenses and reimbursables

Agree before you start which costs the client will pay for: stock photos, fonts, software licences bought for the project, printing, travel. Then put each one on its own invoice line, labelled as a reimbursable expense, and keep the receipt in case the client asks for it.

Decide whether you pass costs on at cost or add a handling markup, and say so in your contract. Billing a $45 stock photo licence as $45 is simple and rarely questioned. A markup is fair for costs that take time to manage, but the client should know about it in advance.

Getting paid: methods and what they cost

Most online card processors charge a percentage of each payment plus a fixed fee. Bank payments are usually much cheaper, which matters on larger freelance invoices. The fees below use the standard US rates our payment fee calculator uses as presets, checked November 2026, plus Stripe’s US ACH Direct Debit rate of 0.8% capped at $5. Your own account may differ.

• Put bank transfer details first on the invoice and offer card payment as a convenience.
• If you want to cover card fees, build them into your rate. Surcharging card payments is restricted in some US states and by card network rules.
• International clients: card and currency conversion fees can add 1% to 2% or more. Agree which currency you invoice in.

W-9 and 1099-NEC: the US paperwork

A US business that hires you will usually ask you to fill in Form W-9 before it pays you. It gives them your legal name, tax classification and taxpayer identification number: your Social Security number, or an EIN if you have one. Getting a free EIN from the IRS means you do not have to hand out your SSN to every client.

The client uses that information to file Form 1099-NEC. For payments made in 2026, a business must file a 1099-NEC for each contractor it paid $2,000 or more for services, up from $600 in earlier years. The change comes from the One, Big, Beautiful Bill Act, and the IRS says the figure may be adjusted for inflation from 2027. Payments you receive by card or through a payment app do not count toward that $2,000, because the payment company may report them on Form 1099-K instead, which has its own threshold of more than $20,000 and more than 200 transactions for payment apps and marketplaces.

None of these thresholds decide whether you owe tax. Every dollar of freelance income is taxable whether or not you receive a form, so keep your own records rather than relying on 1099s.

Do freelancers charge sales tax?

In the US it depends on the state and on the service. Many states tax few or no services; some tax a wide range; others tax particular services such as digital products, software or certain design and data work. A handful of states have no state sales tax at all. Check the rules of your own state and, if you work for clients elsewhere, where they are, before adding tax to an invoice.

If you must collect it, register with the state first, show the tax as a separate line on the invoice and pay it over on the state’s schedule. Outside the US, freelancers often have to register for VAT or GST once their sales pass a threshold, and then charge it on most invoices.

Record keeping and setting tax aside

Keep a copy of every invoice, every receipt for a business expense, and a record of what was paid and when. The IRS generally expects you to keep records that support your tax return for at least three years after filing, and longer in some cases.

As a freelancer no one withholds tax from your pay. US self-employment tax is 15.3% on 92.35% of your profit, about 14.13% of profit, on top of income tax. Many freelancers move 25% to 30% of every payment into a separate savings account the day it arrives, then use it for the quarterly estimated tax payments. The next one for 2026 income is due January 15, 2027.

Frequently asked questions