1. The Exact Order of Operations

Financial software must never leave ambiguity regarding how percentages and line items aggregate. InvoiceFree follows a strict, standardized sequence of calculation:

  1. Line Item Amount: For each row, Amount = round(Quantity × Rate, 2).
  2. Gross Subtotal: Sum of all individual line amounts: Subtotal = Σ(Amounti).
  3. Discount:
    • If percentage: Discount = round(Subtotal × (Percentage / 100), 2).
    • If fixed dollar: Discount = min(Subtotal, round(FixedAmount, 2)).
  4. Taxable Base: Taxable Base = max(0, Subtotal − Discount).
  5. Sales Tax / VAT: Tax = round(Taxable Base × (Tax Rate / 100), 2).
  6. Shipping / Surcharge: Added as a flat, untaxed line after sales tax.
  7. Total Amount: Total = Subtotal − Discount + Tax + Shipping.
  8. Balance Due: Balance Due = Total − Amount Paid.

2. Line-Item Equal Treatment Rule (Fixed-Fee Clarification)

A frequent point of confusion in invoicing tools is how different line-item types are handled. In InvoiceFree:

ALL line-item types — service, hourly, fixed fee, and product items — roll into the Subtotal IDENTICALLY.

3. Rounding Specifications & Cent Matching

Competitor invoicing software frequently exhibits "cent drift" — where the on-screen preview displays $1,250.00, but the exported PDF or printed page displays $1,250.01 due to floating-point rounding mismatches.

InvoiceFree prevents this bug by adhering to a single, shared math path:

4. US Sales Tax Standards & Principles

Our tax fields are designed around real US sales tax realities:

Important Tax Disclaimer: Tax rates and rules depend heavily on physical location, economic nexus thresholds, and service classifications. InvoiceFree provides calculation utilities only. Nothing on this website constitutes legal, tax, or accounting advice. Always consult your state Department of Revenue or a certified public accountant (CPA).

Test our transparent math

Create an invoice and verify the calculations yourself in real time.

Open Invoice Generator