Invoice Template

An invoice is a payment request for products or services that outlines the price and amount for each item. Invoices are generally ‘due upon receipt’ even though most businesses allow up to 30 days to pay before charging late fees.

Contents

By Type

 

 

 

 

What is an Invoice?

An invoice is a document that serves as a bill for goods or services. The party requesting payment (seller) creates the invoice, filling out their details, the client’s details, a description of goods or services rendered, the total amount owed, and the preferred payment method.

Once complete, the invoice should be delivered to the client (buyer) electronically or via standard mail. To further personalize the invoice and for a more formal presentation, include an Invoice Cover Sheet with the delivery.

Fun Fact

Etched in cuneiform on a stone tablet, the oldest known human writing is a 5,000-year-old receipt for the sale of clothing. The oldest recorded form of payment was made in beer and documented in the same cuneiform writing.

Sample Invoice

INVOICE

Details

Date: [X]

Invoice Number: [X]

From                                                                    To

[COMPANY NAME]                                            [COMPANY NAME]

[ADDRESS]                                                         [ADDRESS]

[EMAIL]                                                               [EMAIL]

Description                                                        Amount

______________________________                [X]

______________________________                [X]

______________________________                [X]

Subtotal  [X]

Discount [X]

Vat/Tax    [X]

Total        [X]

Notes

_______________________________________________

How to Make an Invoice (7 steps)

The following guide describes how to make a basic invoice using the generator on our Homepage.

Step 1 – Upload a Logo

Upload a logo from your device that will be placed on the invoice. It’s best to use a logo with square dimensions.

Step 2 – Company Details

Add your company details, including:

  • Business Name
  • Email
  • Phone Number
  • Website

Step 3 – Client Details

Add your client’s contact information, including:

  • Individual Name
  • Company Name
  • Email
  • Phone Number
  • Name
  • Address

Step 4 – Invoice Details

Select an option for the Payment Terms (due date). The Invoice Date (date issued) is populated automatically.

Step 5 – Description of Goods / Services

Fill out the following fields:

  • Description of Goods/Services
  • Cost per Item or Hourly Rate
  • Quantity/Number of Hours

You can easily drag, drop, add, or remove elements.

Step 6 – Calculate Total

Add shipping, custom taxes, and discounts, if applicable. Subtotals and Total Balance Due will be calculated automatically.

Step 7 – Send to the Client and Get Paid!

Before sending your invoice, select the More button and preview the invoice to proofread the final product. When you’re ready to send, select the Send button at the bottom of the page to email the invoice to the client. You can also save the invoice and send a link instead. With an account, you can accept payments by credit card, Venmo, and CashApp.

Components of an Invoice

An invoice should be detailed enough to clearly communicate everything the recipient needs to know, yet simple enough to mitigate confusion. Certain fields must be included for the invoice to hold up legally.

Using a template makes it easy to create and customize an invoice with all the necessary fields. Here are the ten essential components of a legitimate invoice:

  1. Descriptive Header. Usually, this will simply read “Invoice.” With Invoice Maker, you can also make estimates and receipts which will be labeled as such. Use the dropdown menu at the top left of the form to generate this header.
  2. Your Company (Bill From) Details. This section makes it easy for your client to identify and contact you. Use the legal name, address, and contact information of your business. Add your company logo if you have one. Pro tip: If you’re just getting started and have not set up formal business infrastructure, you can use your personal information instead.
  3. Your Client (Bill To) Details. In addition to your client’s company name, address, and contact information, it’s a good idea to include the name of a specific person who will be responsible for paying the invoice.
  4. Invoice Number. Assigning a number to the invoice helps you and your client keep accurate records. Pro tip: if you’re a new freelancer, start somewhere in the hundreds. You can pick any number you want.
  5. Date Issued. It’s important to mark down the date on which the invoice is sent. Invoice Maker does this automatically.
  6. Terms. This section dictates when payment is expected. Select the dropdown menu on the right side of the form below the logo field to enter the terms. Choose a number of days or select a date from the calendar pop-out. The Due Date section will populate automatically. If you choose Custom, no Due Date section will appear. Instead, you can spell out the terms in the Notes section at the bottom. Pro tip: agree on all terms before completing a transaction.
  7. Items, Descriptions, and Cost Per Unit. Use a separate line for each good delivered or service rendered. With Invoice Maker, you can easily add, remove, or rearrange items. Next to each line item, set the price and quantity. You can add custom fees, taxes, and discounts at this stage.
  8. Total Balance Due. Add up the invoice total and display it clearly on the document. Invoice Maker automatically calculates subtotals, applies any taxes or discounts, and displays the total amount owed.
  9. Notes. Use this section to include a personal thank-you note, spell out custom terms and conditions, or communicate any other pertinent information you want to add.
  10. Payment Instructions. The recipient should be able to easily discern their options for paying the invoice. You can include instructions in the Notes section, or use Invoice Maker to accept payment via credit card, Venmo, or Cashapp.

How Long to Keep an Invoice (legally)

As a general rule of thumb, sellers in the United States should hold onto invoices for at least three (3) years. According to the Internal Revenue Service (IRS), an individual or company is required to keep an invoice under the following circumstances:

  • Four (4) years for invoices related to the payment of employees. The 4-year period begins after the date the tax is due or is paid, whichever is later;
  • Six (6) years for invoices that are not reported on your income taxes and represent more than 25% of gross income;
  • Seven (7) years if filed the invoices are related to a claim for a loss from worthless securities or bad debt deduction; and
  • Indefinitely if the invoice was made in a tax year where no filing was made or if a fraudulent return was filed.

Online Invoice Generator FAQs

What are the benefits of using an online invoice generator?

Using an online invoice generator saves you time, keeps you organized, and makes you look more professional.

  • Easy to use: customize the look, contents, and details of your invoice in seconds. Save clients, products, services, and discounts for future use. Duplicate, edit, and send invoices seamlessly so you don’t have to start over from scratch.
  • Tracks information: at a glance, you can see whether an invoice is in draft mode, outstanding, or paid. View, edit, and manage all your invoices in one place.
  • Clean look: your recipient gets a beautiful invoice with a modern layout that is easy to understand and act upon.

Is using an online invoice generator safe and secure?

Using an online invoice generator protects you from having to reveal sensitive information to clients and buyers. Invoice Maker takes your privacy seriously and encrypts all of your data so you never have to worry about it falling into the wrong hands.

Can I customize the branding on my invoice?

The branding on your invoice is completely up to you. You can customize the color scheme and add your own logo in our super user-friendly invoice builder. To remove Invoice Maker branding, go to Settings and toggle this feature off under Invoice Defaults.

How do I send my invoice?

When you hit the Send button, your invoice will be delivered to the email address included in the Bill To section. Alternatively, you can send your client a link to the invoice in a separate email.

Can I send my invoice as a PDF?

Yes. You can generate a PDF version of your invoice. It will feature live links in the payment section, just like the webpage version.

How do I manage a payment state?

Payment states are updated automatically in Invoice Maker. You can also open the invoice and select More to manually mark the invoice as paid, unpaid, or void.

Maximum Invoice Late Fees and Penalties

Below are the maximum penalties that can be charged if an invoice is not paid. Any late fees must be written in the invoice at the time of sending it to a client. The late fee is calculated by the total amount owed multiplied by the interest rate (%) on a per annum basis.

USA (50 States)

State USURY RATE SOURCE
Alabama 6% maximum for verbal agreements, 8% for written agreements. § 8-8-1
Alaska Cannot exceed 10% or 5 percentage points above Federal Reserve interest rate; 10.5% if loan is more than $25,000. § 45.45.010
Arizona 10% unless agreed upon in a written contract. § 44-1201
Arkansas May not exceed the applicable rate of interest (17%) set forth in Section 3 of the Arkansas Constitution, Amendment 89. § 4-57-104
California 7% for money, goods, or things in action; 10% for money, goods, or things in action for personal, family, or household purposes; or the greater of 10% or 5% + the prevailing rate established by the Federal Reserve Bank of San Francisco for any other use. Article XV
Colorado Maximum is 45% per annum. If no written agreement exists, interest rate may not exceed 8%. § 5-12-103
Connecticut Interest rate may not exceed 12%. § 37-4
Delaware Maximum rate of interest is 5% over the Federal Reserve discount rate. No limitations on interest rates for loans exceeding $100,000. § 2301
Florida 18% unless loan exceeds $500,000, in which case the rate of interest can be 25% (in accordance with § 687.071(2)) § 687.03
Georgia Maximum interest rate is 7% if no written contract exists; 16% on loans of $3000 or less; and any rate of interest may be established by parties to a written contract for loans of $250,000 or more. § 7-4-2
Hawaii 10% without a written contract; 12% for consumer credit transactions; and 10% on judgments recovered in any civil suit. § 478-2, § 478-3, and § 478-4
Idaho Maximum of 12% if no contract exists. 5% plus base rate on money due on judgments. § 28-22-104
Illinois 5% without a written contract, 9% maximum if agreed upon by parties to a written agreement. 815 ILCS 205/4 and 815 ILCS 205/1
Indiana The interest rate may not exceed 8%. Consumer loans may be charged a maximum of 25%. § 24-4.6-1-102 and § 24-4.5-3-201
Iowa 5% with no written contract; for written agreements, 2 percentage points above the monthly average 10-year constant maturity interest rate of US government notes and bonds. § 535.2(1) and (3)(a)
Kansas 10% maximum if no other interest rate was agreed upon. Bonds, bills, promissory notes, or other written instruments may stipulate a maximum of 15%. § 16-201 and § 16-207
Kentucky Legal rate of interest is 8%. If a written agreement exists, the rate may be increased to 4% in excess of the discount rate on 90-day commercial paper in effect at the Federal Reserve Bank OR 19%, whichever is less, on loans of $15,000 or less. Any rate is permitted for loans in excess of $15,000. § 360.010
Louisiana Maximum interest rate is 12% per annum. § 9:3500(C)(1)
Maine Without a written contract, maximum interest rate is 6%. Maximum rates for consumer credit sales are 30% for first $1,000, 21% between $1,000 and $2,800, 15% for more than $2,800, and 18% on all unpaid balances. 9-B § 432 and 9-A § 2-201
Maryland Maximum is 6% unless a written agreement is established, in which case interest rate can be up to 8%. § 12-102 and § 12-103
Massachusetts 6% maximum interest rate with no written agreement. Charging more than 20% interest is considered criminal usury. Ch. 107 § 3 and Ch. 271 § 49
Michigan 5% if no written agreement exists, 7% if an agreement is made between the parties in writing. § 438.31
Minnesota Interest rate is 6%, unless a different rate is agreed upon in writing. Interset rate may not exceed 8%. § 334.01
Mississippi Maximum interest rate is 8% per annum. “Contract rate” may not exceed the greater of 10% or 5% above the discount rate on 90-day commercial paper in effect at the Federal Reserve Bank. § 75-17-1
Missouri Rate of interest may not exceed 10% if a written instrument exists, unless the “market rate” is higher. § 408.030
Montana Interest rate is 10% per annum. Parties may agree in writing to a maximum interest rate of 15% OR 6 percentage points above prime rate established by Federal Reserve System, whichever is greater. § 31-1-106 and § 31-1-107
Nebraska Maximum interest rate is 16%. § 45-101.03
Nevada Parties may agree in writing to any interest rate. Without a written agreement, the rate shall not exceed the prime rate at the largest bank in Nevada. § 99.040
New Hampshire Maximum rate of interest is 10% § 336:1
New Jersey Maximum rate of interest is 6% without a contract. Maximum rate of interest with a written contract is 16%. § 31:1-1
New Mexico Rate of interest shall not exceed 15% without a written contract. § 56-8-3
New York Interest rate is 6% per annum unless a different rate is prescribed in NY CLS Banking, in which case legal interest rate is 16%. Gen. Oblig. § 5-501 and Banking § 14-A
North Carolina Legal rate of interest is 8%. § 24-1
North Dakota Maximum interest rate is 6%. Maximum contract rate is 5.5% higher than current cost of money but no less than 7%. § 47-14-05 + 09
Ohio Written contracts may not stipulate a rate of interest exceeding 8%. § 1343.01
Oklahoma Parties may agree to any rate permitted by state law; otherwise, 6% is the maximum rate without a written contract. § 15-266
Oregon Maximum interest rate is 9%. § 82.010(1) + (3)
Pennsylvania Maximum interest rate is 6% for loans of $50,000 or less. 41 P.S. § 201
Rhode Island Interest rate may not exceed the greater of 21% or the alternate rate of 9 percentage points plus the domestic prime rate. § 6-26-2
South Carolina Legal rate of interest is 8.75%. § 34-31-20
South Dakota 12% where no contract exists; no interest rate limit if parties agree in writing. § 54-3-4 and § 54-3-16(3)
Tennessee Unless the parties agree in writing, the maximum interest rate is 10%. § 47-14-103
Texas Unless the parties agree in writing, the maximum interest rate is 10%. § 302.001(b)
Utah Unless the parties agree in writing, the maximum interest rate is 10%. § 15-1-1
Vermont Maximum rate of interest is 12%. 9 V.S.A. § 41a
Virginia Legal rate of interest is 6%. If parties agree in writing, the interest rate may be a maximum of 12%. § 6.2-301 and § 6.2-303
Washington Rate of interest may not exceed 12% OR 4 percentage points above the equivalent coupon yield of the average bill rate for 26-week treasury bills. § 19.52.020
West Virginia Parties may agree to a maximum interest rate of 8%; otherwise, the legal interest rate is 6%. § 47-6-5
Wisconsin Legal interest rate is 5%. § 138.04
Wyoming Maximum interest rate is 7% if no agreement exists. § 40-14-106

By Country (Top 50)

COUNTRY MAXIMUM PENALTY SOURCE
USA 0%; however, most states implement a sales tax N/A
Argentina No maximum rate N/A
Australia 48% from interested collected plus other fees Consumer Credit Act in NSW and ACT
Bangladesh 6% Trading Economics
Belgium No maximum rate N/A
Brazil 6.5% Banco Central Do Brasil
Bulgaria No maximum rate N/A
Canada 60% § 347 of the Criminal Code
Chile 36% Science Direct
China 36% Bloomberg
Colombia 33% Borradores de Economia
Dominican Republic No maximum rate Latin Lawyer
Finland 7 percentage points higher than the interest rate applied by the European Central Bank Finland Interest Act (633/1982)
France An annual rate higher than 1/3 the average percentage rate applied by credit institutions is usury French Consumer Code Article L313-3
Germany 5 percentage points above the basic rate of interest (currently 3.62%) Section 288(1) of German Civil Code
Greece 2 percentage points above the maximum contractual interest rate. E-Justice
Hong Kong 60% Hong Kong Legistlation Cap. 163, Section 24(1)
Hungary No maximum rate N/A
India At such rate as the Court deems reasonable India Code Usury Laws Repeal Act, 1855, Section 2
Ireland 187% to 287% Consumer Credit Act
Israel 13% per annum, 17% per annum on arrear interest Banking Regulation in Israel: Prudential Regulation versus Consumer Protection
Italy 25% plus 400 basis points (or exceed average market rate by 800 basis points) Lexology
Jamaica 6% Money Lending Act
Kenya No maximum rate N/A
Malaysia 12% for secured loan, 18% for an unsecured loan Moneylenders’ Act 1951, Section 17A
Mexico No maximum rate N/A
Morocco No maximum rate N/A
Netherlands No maximum, except on consumer credit loans Practical Law
New Zealand No maximum rate Commerce Commission New Zealand
Nigeria 48% Thomson-Reuters (Practical Law)
Norway No maximum rate N/A
Pakistan Interest not permitted under Pakistani laws for domestic lending Practical Law
Panama No maximum rate N/A
Peru No maximum rate N/A
Philippines No maximum rate N/A
Poland 4 times the pawn loan rate of the National Bank of Poland Polish Civil Code Article 359(2¹)
Portugal 7% or 9% (depending on in rem guarantee) Law and Practice Portugal, Section 4.3
Puerto Rico (USA) 6% Financing USA
Russia Cannot exceed more than twice the usual applicable rate Civil Code Chapter 42, Section 1, Article 809(5)
Saudi Arabia No maximum rate N/A
Singapore 4% per month Singapore Ministry of Law
South Africa 10% National Credit Act, Chapter 5, Part C (105)
Spain No maximum rate N/A
Sri Lanka 20%, 18%, or 15% Sri Lanka Money Lending Ordinance Section 4(2)
Sweden No maximum rate N/A
Switzerland 10% or 12% Swiss Credit Consumer Act, Section 3
Thailand 15% Thai Civil and Commercial Code Book 3, Chapter II, Section 654
Ukraine No maximum rate N/A
United Kingdom No maximum for payday loans Credit Unions Act 1979
Vietnam 20% Vietnamese Civil Code, Chapter XVI, Section 4, Article 478(1) (Full PDF)
Zimbabwe Not specifically defined Moneylending and Rates of Interest Act, Chapter 14:14, Section 8 

Taxes on Goods and Services

Are Services Taxed?

Services are taxed based on the service provider’s country. In most countries, services are taxed at the Value-Added Tax (VAT).

In the USA, only four (4) States charge taxes on general services:

Is Shipping Taxed?

Depends on the final destination of the product. For example, in the USA shipping is taxed in about half the States as long as the shipping charge is separate from the sale (see table below).

Tax Requirements

State Shipping Taxed? Source
Alabama Not subject to sales tax if the shipping charges are listed separately on the invoice. Admin Code 810-6-1-.178
Alaska No sales tax. N/A
Arizona Not subject to sales tax. Handling charges are taxed. If shipping and handling, the entirety is taxed. Admin Code § R15-5-133
Arkansas Subject to sales tax. GR-18
California Not subject to sales tax if the shipping charges are listed separately on the invoice. Publication 100 (Shipping and Delivery Charges), Article 12 Regulation 1628
Colorado Not subject to sales tax if the shipping charges are listed separately on the invoice. Colorado Sales Tax Guide (Page 10)
Connecticut Subject to sales tax. Page 13 of IP-2018(5)
Delaware No sales tax. N/A
Florida Not subject to sales tax if the shipping charges are listed separately on the invoice. Sales Tax Rules 12A-1.045, FAQ from FL Dept. of Revenue
Georgia Subject to sales tax. § 48-8-2(34)(A)(iv)
Hawaii Subject to sales tax. § 237-3
Idaho Not subject to sales tax if the shipping charges are listed separately on the invoice. tax.idaho.gov (Retailers), § 63-3613(b)(7)
Illinois Subject to sales tax. Nancy Kean vs Wal Mart Stores Inc., § 130.415(b)(1)(D)(ii)
Indiana Subject to sales tax. § 6-2.5-1-5(a)(4) , Commissioner’s Directive #23 (top of Page 2
Iowa Not subject to sales tax if the shipping charges are listed separately on the invoice. tax.iowa.gov (Sales and Use Tax Guide)
Kansas Subject to sales tax. Sales Tax and Compensating Use Tax (Page 15), § 79-3602(ll)
Kentucky Not subject to sales tax if the shipping charges are listed separately on the invoice. Kentucky Sales Tax Facts (Page 2), KRS 139.010(15)(a)(4), KRS 139.210
Louisiana Not subject to sales tax if the shipping charges are listed separately on the invoice. RS 47:301(3)(a), Revenue Ruling No. 01- 007
Maine Not subject to sales tax if the shipping charges are listed separately on the invoice.

Title 36, § 1752(14), Business Guide to Sales, Use, and Service Provider Tax

Maryland Not subject to sales tax if the shipping charges are listed separately on the invoice. COMAR 03.06.01.08
Massachusetts Not subject to sales tax if the shipping charges are listed separately on the invoice.

Directive 04-5, Directive 98-5

Michigan Subject to sales tax. § 205.51(1)(d)
Minnesota Subject to sales tax. § 297A.61(7)(a)
Mississippi Subject to sales tax. Dept. of Revenue FAQs, Mississippi State Tax Commission Part IV Sales and Use Tax (Pages 16-17)
Missouri Not subject to sales tax if the shipping charges are listed separately on the invoice. Senate Bill No. 16
Montana No sales tax. N/A
Nebraska Subject to sales tax. § 77-2701.35, Nebraska Sales and Use Tax Guide on Delivery Charges
Nevada Not subject to sales tax if the shipping charges are listed separately on the invoice. NAC 372.101, NRS 360B.480, NRS 360B.290(2), Tax Bulletin SUT 15-0002
New Hampshire No sales tax. N/A
New Jersey Subject to sales tax. Publication ANJ-10, Notice: Sales and Use Tax Rate Change, Bulletin S&U-4, § 54:32B-2(oo)(1), Admin. Code § 18:24-27.2
New Mexico Subject to sales tax if the Seller is making the payment to the carrier. In other words, shipping is almost always taxable. N.M. Code R. § 3.2.1.15(D)
New York Subject to sales tax except for grocery food § 1101(a)(b)(3), § 1115(n)(3)
North Carolina Subject to sales tax. § 105-164.3(203), Sales and Use Tax Bulletins (Page 83), North Carolina Dept. of Revenue FAQs
North Dakota Subject to sales tax. § 57-39.2-01(7), § 81-04.1-01-10 (Page 6)
Ohio Subject to sales tax. § 5739.01(H)(1)(a)(iv), § 5703-9-52
Oklahoma Subject to sales tax. § 710:65-19-70, 68, § 1352(12.a)
Oregon No sales tax. N/A
Pennsylvania Subject to sales tax. 61 Pa. Code § 54.1 , Pennsylvania Dept. of Revenue FAQ
Rhode Island Subject to sales tax. § 44-18-12(a)(iv), Regulation SU 07-33
South Carolina Subject to sales tax. § 117-310, Dept. of Revenue (FAQs)
South Dakota Subject to sales tax. Rule 64:06:02:34, South Dakota Dept. of Revenue (Publication)
Tennessee Subject to sales tax. § 67-6-102 , 1997 Letter Ruling #97-22, Dept. of Revenue FAQs,
Texas Subject to sales tax. Sec. 151.007, Texas Comptroller FAQs
Utah Not subject to sales tax if the shipping charges are listed separately on the invoice. § 59-12-102(103)(c)(ii), Tax Commission FAQs
Vermont Subject to sales tax. § 9701(4)(A), Dept. of Taxes FAQs
Virginia Not subject to sales tax if the shipping charges are listed separately on the invoice. 23VAC10-210-6000(A)
Washington Subject to sales tax. § 82.08.807, WAC 458-20-110(3)
West Virginia Subject to sales tax. § 11-15B-2(49)(A)(iv), § 110-15-89 (Page 142)
Wisconsin Subject to sales tax. § 77.51(15b)(b)4, Dept. of Revenue FAQs
Wyoming Not subject to sales tax if the shipping charges are listed separately on the invoice. § 39-15-105(a)(ii)(A), Dept. of Revenue (Freight and Transportation Charges)

Sales Tax (USA only)

A sales tax is calculated as a percentage of goods sold and is determined by the location where the sale took place. Sales taxes are administered by each State, County, and District(s) in the USA.

  • Use TaxJar to find a sales tax by zip code.
STATE SALES TAX SOURCE
Alabama 4% § 40-23-2(1), § 40-23-61(a)
Alaska No sales tax N/A
Arizona 5.6% Arizona Dept. of Revenue
Arkansas 6.5% Arkansas Dept. of Finance and Administration
California 7.25% California Dept. of Tax and Fee Admin.
Colorado 4% Colorado Dept. of Revenue Taxation Division
Connecticut 6.35% Connecticut Dept. of Revenue Services
Delaware No sales tax N/A
Florida 6% Florida Dept. of Revenue
Georgia 4% Georgia Dept. of Revenue
Hawaii 4% (General Excise Tax) Hawaii Dept. of Taxation
Idaho 6% Idaho State Tax Commission
Illinois 6.25% Illinois Revenue
Indiana 7% Indiana Dept. of Revenue
Iowa 6% Iowa Dept. of Revenue: Sales and Tax Guide
Kansas 6.5% Kansas Dept. of Revenue
Kentucky 6% § 139.200
Louisiana 4.45% Louisiana Dept. of Revenue
Maine 5.5% Maine Revenue Services
Maryland 6% Comptroller of Maryland
Massachusetts 6.25% Massachusetts Sales and Use Tax
Michigan 6% § 205.52
Minnesota 6.875% Minnesota Dept. of Revenue
Mississippi 7% Mississippi Dept. of Revenue
Missouri 4.225% Missouri Dept. of Revenue
Montana No sales tax N/A
Nebraska 5.5% Nebraska Sales and Use Tax
Nevada 6.85% Nevada Dept. of Taxation
New Hampshire No sales tax N/A
New Jersey 6.625% New Jersey Division of Taxation
New Mexico 5.125% (Gross Receipts Tax) Taxation & Revenue New Mexico
New York 8.875% NYC Dept. of Finance
North Carolina 4.75% North Carolina Dept. of Revenue
North Dakota 5% North Dakota Tax
Ohio 5.75% Ohio Dept. of Taxation
Oklahoma 4.5% Oklahoma Tax Commission
Oregon 0% Oregon Dept. of Revenue
Pennsylvania 6% Pennsylvania Dept. of Revenue
Rhode Island 7% Rhode Island Dept. of Revenue Division of Taxation
South Carolina 6% South Carolina Dept. of Revenue
South Dakota 4.5% South Dakota Dept. of Revenue
Tennessee 7% Tennessee Dept. of Revenue
Texas 6.25% Comptroller of Texas
Utah 4.85% Utah State Tax Commission
Vermont 6% Vermont Dept. of Taxes
Virginia 5.3% Virginia Tax
Washington 6.5% Washington Dept. of Revenue
West Virginia 6% West Virginia State Tax Dept.
Wisconsin 5% Wisconsin Dept. of Revenue
Wyoming 4% Wyoming Dept. of Revenue

Value-Added Tax (VAT)

A value-added tax (VAT) is a tax that is calculated based on the cost of the goods or service charged. This tax is administered by most countries and usually is targeted at imported items.

COUNTRY VAT SOURCE
USA 0% (although, there is sales tax in most states) N/A
Argentina 21% PWC
Australia 10% TransferWise
Bangladesh 15% nbr.gov.bd
Belgium 21% www.belgium.be
Brazil Depends on the State. Average is 17% KPMG
Bulgaria 20% www.tmf-group.com
Canada 5% to 15% www.worldwide-tax.com
Chile 19% home.kpmg
China 13% www.tradingeconomics.com
Colombia 19% Avalara
Dominican Republic 18% KPMG
Finland 24% Finland Ministry of Finance
France 20% www.tmf-group.com
Germany 19% www.tradingeconomics.com
Greece 24% www.tradingeconomics.com
Hong Kong 0% www.scmp.com
Hungary 27% Avalara
India 12.5% to 15% www.tradingeconomics.com
Ireland 23% Irish Tax and Customs
Israel 17% Israel Tax Authority
Italy 22% Ministry of Economy and Finance
Jamaica 16.5% Trading Economics
Kenya 0% or 16% Kenya Revenue Authority
Malaysia 6% lawofficemalaysia.com
Mexico 16% Avalara
Morocco 7%, 10%, 14%, or 20% (Standard is 20%) www.ecovis.com
Netherlands 0%, 9%, or 21% (Standard is 21%) Government of Netherlands
New Zealand 13% www.world.tax-rates.org
Nigeria 7.5% Avalara
Norway 25% The Norwegian Tax Administration
Pakistan 17% taxsummaries.pwc.com
Panama 7% (10% and 15% for alcohol and tobacco, respectively) KPMG
Peru 18% Avalara
Philippines 0% to 12% Philippines Bureau of Internal Revenue
Poland 23% Polish Investment and Trade Agency
Portugal 23% Avalara
Puerto Rico (USA) 0% N/A
Russia 10% or 20% (Updated from 18% in 2019) Federal Tax Service of Russia
Saudi Arabia 15% Avalara
Singapore 7% Inland Revenue Authority of Singapore
South Africa 15% South African Revenue Service (SARS)
Spain 21% Spanish Tax Agency
Sri Lanka 15% Sri Lanka Inland Revenue
Sweden 6%, 12%, and 25% (Standard is 25%) Swedish Tax Agency
Switzerland 7.7% Swiss Federal Tax Administration
Thailand 7% Thailand Revenue Department
Ukraine 20% Avalara
United Kingdom 20% GOV.UK
Vietnam 5% or 10% Ministry of Justice
Zimbabwe 14% Zimbabwe Revenue Authority

Are You Considered an Employee?

There are two (2) legally recognized classes of employment: employees and independent contractors.

Employees

An employee, or “W-2 employee” in the USA, is an individual who performs a service on an employer’s behalf in exchange for payment, commonly hourly pay. The employer can control the services to be completed and the method by which they should be done (for example, the work schedule and equipment used). The employer can also control, in most cases, where the employee performs the services.

  • IRS Form W-2 – Must be completed by the employee and given to the employer before employment starts.

Independent Contractors

An independent contractor, or “1099 contractor” in the USA, is an individual who performs a task for an employer in exchange for payment, commonly a fixed price. The employer cannot control how the task is to be completed. The employer also cannot control, in most cases, where the employee performs the services unless the work is at a specific location.

  • IRS Form W-9 – Must be completed by the independent contractor and given to the employer prior to the start of the engagement.

Employee vs Independent Contractor

Each state determines ultimately determines its definition of an employee. Most states rely on the IRS 20-Point Test to determine if an individual is an employee. The table below is an overview of the two (2) classes of employment:

Employer: Employee Independent Contractor
Pays Withholding Taxes (social security, medicare, unemployment, etc.) X
Provides Health Insurance X
Provides 401(k) Matching X
Provides PTO (Paid Time Off for vacation, sick leave, etc.) X
Provides Overtime Pay X
Controls How Work is Performed X
Controls Where Work is Performed X
Controls When Work is Performed X
Controls Results of Work