Calculate invoice totals with taxes, discounts, and late payment fees based on your payment terms.
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A Texas-based freelance graphic designer earns $140,000 net profit/year from client work. She's evaluating whether to stay as a sole proprietor, form an LLC, or elect S-Corp status to reduce self-employment taxes.
Takeaway: S-Corp saves $8,300/year but adds ~$1,500-$3,000 in accounting fees (payroll, extra returns). Break-even is around $80-90K net profit. Below that, the overhead eats the savings. Texas has no state income tax, so the benefit is purely federal SE savings.
LLC annual fees range from $0 (Ohio) to $800 minimum (California, even for zero-revenue LLCs). Delaware C-Corp is standard for VC-backed companies but adds registered agent costs (~$300/yr) for out-of-state entities. The "best" structure is state-specific.
S-Corps cannot have more than 100 shareholders, cannot have non-US shareholders, and cannot have corporate shareholders. Violating these rules (e.g., adding a foreign investor) terminates S-Corp status retroactively, potentially creating a large unexpected tax event.
The IRS requires S-Corp owner-employees to pay themselves a "reasonable salary" before taking distributions. There is no fixed formula — the IRS looks at industry benchmarks, duties, and hours worked. Setting the salary too low is a common audit trigger for S-Corps.
Business break-even models track revenue vs. direct costs. They rarely factor in the owner's time as a cost. If you're working 60 hours/week at imputed $50/hour, your "profitable" business may be paying you $12/hour after the opportunity cost calculation.
Break-Even CalculatorA service business valued on EBITDA multiples (2-4×) gets a very different number than one valued on SDE (seller's discretionary earnings) or discounted cash flow. Buyers and sellers typically use different methods to argue their preferred price. This calculator uses a single method.
Business Valuation CalculatorBased on your inputs
No late fee
| Subtotal | $1000.00 |
|---|---|
| Discount | -$0.00 |
| Taxable Amount | $1000.00 |
| Tax (8.5%) | $85.00 |
| Invoice Total | $1085.00 |
| Late Fee (0 days) | $0.00 |
| Total Due Now | $1085.00 |
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Late fee = (Outstanding Balance × Annual Rate / 365) × Days Overdue. Many businesses charge 1.5% per month.
Net-30 means payment due in 30 days. Net-15 and Net-60 are also common. '2/10 Net 30' means 2% discount if paid in 10 days.
Yes, if disclosed upfront in the contract or invoice. Check your state's maximum interest rate laws for limits.
Invoice number, date, due date, itemized services/products, subtotal, taxes, and total amount due.
Net 30 means payment is due within 30 calendar days of the invoice date. Other common terms include Net 15 (15 days), Net 60 (60 days), and Due on Receipt (immediate payment expected).
This payment term offers a 2% discount if the invoice is paid within 10 days; otherwise, the full amount is due in 30 days. The 2% early payment discount equals roughly 36% annualized return for the buyer.
Record partial payments against the invoice balance and issue updated statements showing the remaining amount due. Specify in your terms whether partial payments are accepted and how they apply to the balance.
It depends on your state and service type. Most states tax tangible goods but not services. However, some states tax certain services like SaaS, digital products, repairs, and landscaping.
Send a friendly reminder 1-3 days after the due date, a formal past-due notice at 15 days, and a final notice at 30 days. After 60-90 days, consider collections or legal action.
Use a sequential numbering system with a prefix such as INV-2024-001 or your initials followed by the date and sequence number. Never reuse invoice numbers. Consistent numbering helps with accounting, tax filing, and audit trails.
Total = (Subtotal − Discount) × (1 + Tax%)
Late Fee = Total × Monthly Rate × (Days Overdue / 30)
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
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Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.