[{"data":1,"prerenderedAt":1365},["ShallowReactive",2],{"page-\u002Fhow-long-to-keep-invoices-and-receipts":3,"related-\u002Fhow-long-to-keep-invoices-and-receipts":417},{"id":4,"title":5,"author":6,"body":7,"category":403,"date":404,"dek":405,"description":406,"extension":407,"featured":408,"meta":409,"navigation":410,"path":411,"readingTime":412,"seo":413,"sitemap":414,"stem":415,"__hash__":416},"content\u002Fhow-long-to-keep-invoices-and-receipts.md","How Long Should You Keep Invoices and Receipts? Record-Keeping Rules for Small Businesses","Daniel Reed",{"type":8,"value":9,"toc":385},"minimark",[10,15,19,22,25,29,32,37,45,48,76,84,88,95,102,120,123,127,134,137,152,156,163,175,179,182,246,254,258,261,265,268,271,291,294,314,317,321,324,349,352,356,382],[11,12,14],"h2",{"id":13},"the-number-that-actually-matters","The number that actually matters",[16,17,18],"p",{},"Most people assume the answer is \"seven years\" and stop thinking about it. That's a myth borrowed from old accounting habits, and following it blindly means you either shred documents too early or drown in paper you never needed to keep.",[16,20,21],{},"The real answer depends on where you file, what kind of record it is, and whether your return is ordinary or messy. The retention clock is tied to how long your tax authority can come back and question a return, plus a buffer for edge cases like unreported income or losses carried forward. Get that framing right and the country-specific rules fall into place quickly.",[16,23,24],{},"Here's what each of the four major English-speaking tax authorities expects, followed by the practical stuff: what counts as a \"record,\" how to store it digitally, and when the standard period stretches.",[11,26,28],{"id":27},"the-baseline-periods-by-country","The baseline periods by country",[16,30,31],{},"These are the general rules for a self-employed person or small business. Thresholds and rules can change, so confirm the current position with your tax authority or an accountant before you bin anything.",[33,34,36],"h3",{"id":35},"united-states-irs","United States (IRS)",[16,38,39,40,44],{},"The default is ",[41,42,43],"strong",{},"three years"," from the date you filed the return (or the due date, whichever is later). That's the standard window in which the IRS can audit a straightforward return and you can amend one.",[16,46,47],{},"The window widens in specific situations:",[49,50,51,58,64,70],"ul",{},[52,53,54,57],"li",{},[41,55,56],{},"Six years"," if you underreported gross income by more than 25%.",[52,59,60,63],{},[41,61,62],{},"Seven years"," if you're claiming a loss from worthless securities or a bad-debt deduction.",[52,65,66,69],{},[41,67,68],{},"At least four years"," for employment tax records (if you have contractors or staff), counted from the date the tax was due or paid.",[52,71,72,75],{},[41,73,74],{},"Indefinitely"," if you never filed a return, or if a return was fraudulent. There's no statute of limitations on those.",[16,77,78,79,83],{},"Records tied to property (equipment, a vehicle, a home office) should be kept until the limitations period runs out for the year you ",[80,81,82],"em",{},"dispose"," of that property, because you need the purchase records to calculate depreciation and gain or loss.",[33,85,87],{"id":86},"united-kingdom-hmrc","United Kingdom (HMRC)",[16,89,90,91,94],{},"If you're a sole trader or in a partnership filing Self Assessment, keep records for ",[41,92,93],{},"at least five years after the 31 January submission deadline"," of the relevant tax year. So for the 2024\u002F25 tax year (deadline 31 January 2026), you'd keep records until roughly 31 January 2031.",[16,96,97,98,101],{},"Limited companies work on a different clock: ",[41,99,100],{},"six years from the end of the accounting period",".",[16,103,104,105,108,109,114,115,119],{},"VAT records get their own rule: ",[41,106,107],{},"six years"," (or 10 years if you use certain VAT accounting schemes for digital services). If VAT registration is on your radar, the ",[110,111,113],"a",{"href":112},"\u002Fdo-i-need-to-register-for-vat","VAT registration guide"," and the ",[110,116,118],{"href":117},"\u002Fuk-vat-invoices-explained","UK VAT invoices explainer"," cover what those invoices need to contain in the first place.",[16,121,122],{},"HMRC can extend its assessment window to 6 years for carelessness and up to 20 years where deliberate behaviour is involved, so the five-year floor is a minimum, not a ceiling.",[33,124,126],{"id":125},"canada-cra","Canada (CRA)",[16,128,129,130,133],{},"The general rule is ",[41,131,132],{},"six years from the end of the last tax year the records relate to",". For a calendar-year sole proprietor, records for the 2025 tax year should be kept until the end of 2031.",[16,135,136],{},"Some nuances:",[49,138,139,142,145],{},[52,140,141],{},"If you file a return late, the six years run from the date you actually filed.",[52,143,144],{},"If you file a notice of objection or appeal, keep the relevant records until the matter is resolved and the appeal period ends.",[52,146,147,148,151],{},"To destroy records ",[41,149,150],{},"before"," the six years are up, you technically need written permission from the CRA (Form T137).",[33,153,155],{"id":154},"australia-ato","Australia (ATO)",[16,157,158,159,162],{},"Keep most records for ",[41,160,161],{},"five years",", generally counted from when you prepared or obtained the record, or completed the transaction, whichever is later. If a record is used in a later return (for example, an asset you depreciate over several years), the five years start from the later filing.",[16,164,165,166,169,170,174],{},"The five-year period restarts on records connected to a dispute or amendment until that's settled. Capital gains tax records for an asset should be kept for five years ",[80,167,168],{},"after"," you sell it. Australia's ",[110,171,173],{"href":172},"\u002Fwhat-is-a-tax-invoice-australia","tax invoice rules"," also dictate what a compliant invoice must show, which matters because an incomplete invoice can undermine a GST credit claim years later.",[11,176,178],{"id":177},"what-records-actually-means","What \"records\" actually means",[16,180,181],{},"\"Invoices and receipts\" is shorthand. Tax authorities expect a complete enough trail that someone could reconstruct your income and expenses from scratch. Keep:",[49,183,184,195,201,207,213,219,235],{},[52,185,186,189,190,194],{},[41,187,188],{},"Sales invoices you issued",", in sequence. Good ",[110,191,193],{"href":192},"\u002Finvoice-numbering-best-practices","invoice numbering"," makes gaps obvious, which is exactly what an auditor looks for.",[52,196,197,200],{},[41,198,199],{},"Purchase invoices and expense receipts"," you received, including small cash receipts.",[52,202,203,206],{},[41,204,205],{},"Bank and credit card statements"," for business accounts.",[52,208,209,212],{},[41,210,211],{},"Proof of payment",": remittance advice, payment processor reports, transfer confirmations.",[52,214,215,218],{},[41,216,217],{},"Mileage or vehicle logs",", and records supporting home-office claims.",[52,220,221,224,225,229,230,234],{},[41,222,223],{},"Payroll and contractor records"," (in the US, that includes filed ",[110,226,228],{"href":227},"\u002Fwhat-is-a-1099-nec-freelancer-guide","1099-NEC"," forms and the ",[110,231,233],{"href":232},"\u002Fhow-to-fill-out-a-w9-freelancer","W-9s"," you collected).",[52,236,237,240,241,245],{},[41,238,239],{},"Credit notes and refunds",", since a ",[110,242,244],{"href":243},"\u002Fwhat-is-a-credit-note","credit note"," changes the amount actually owed on an earlier invoice.",[16,247,248,249,253],{},"An invoice and a receipt are not interchangeable. One requests payment; the other proves it was made. If you're fuzzy on the distinction, the ",[110,250,252],{"href":251},"\u002Finvoice-vs-receipt","invoice vs receipt breakdown"," is worth a look, because an auditor may want both halves of a transaction.",[33,255,257],{"id":256},"a-worked-example-of-the-clock","A worked example of the clock",[16,259,260],{},"Say you're a UK freelance designer. In August 2025 you buy a £1,400 laptop and expense it. That purchase belongs to the 2025\u002F26 tax year, deadline 31 January 2027. Your five-year floor runs to roughly 31 January 2032. If you'd instead treated the laptop as a capital asset used over several years, you'd want the receipt for as long as it affects your figures, plus the retention period after that. The takeaway: the item doesn't leave your file when you stop using it, it leaves when the tax window for its last relevant year closes.",[11,262,264],{"id":263},"digital-storage-whats-allowed","Digital storage: what's allowed",[16,266,267],{},"Every one of these four authorities accepts electronic records. None of them require the original paper, provided the digital version is a true, complete, and legible copy that you can produce on request. A photo of a receipt taken the day you got it is generally fine, and often better than a faded thermal-paper original that will be blank in two years.",[16,269,270],{},"Practical standards to meet:",[49,272,273,279,285],{},[52,274,275,278],{},[41,276,277],{},"Legibility and completeness."," The whole document must be readable, including totals, dates, tax amounts, and the supplier's details.",[52,280,281,284],{},[41,282,283],{},"Accessibility."," You must be able to retrieve and produce records reasonably quickly if asked. A drive you can't find the password for doesn't count.",[52,286,287,290],{},[41,288,289],{},"Integrity."," Records shouldn't be easily altered after the fact. Cloud accounting software with an audit trail satisfies this better than a folder of loose JPEGs.",[16,292,293],{},"Country-specific notes:",[49,295,296,302,308],{},[52,297,298,301],{},[41,299,300],{},"UK:"," Making Tax Digital rules require many businesses to keep digital records and file using compatible software, so digital isn't just permitted, it's increasingly mandatory.",[52,303,304,307],{},[41,305,306],{},"Canada:"," Electronic records must be kept in an electronically readable format even if you also have paper. If your records are stored on servers outside Canada, the CRA may require access or that copies be kept in Canada.",[52,309,310,313],{},[41,311,312],{},"Australia and the US:"," Both accept scanned or born-digital records as long as they're accurate and retrievable for the full retention period.",[16,315,316],{},"A workable system for a solo operator: one accounting app connected to the business bank account, receipt capture by phone photo at the point of purchase, and an annual export (PDF plus CSV) backed up to a second location. That redundancy matters, because \"my laptop died\" is not a defence a tax authority accepts.",[11,318,320],{"id":319},"keeping-records-longer-than-required","Keeping records longer than required",[16,322,323],{},"There are good reasons to hold some documents beyond the minimum:",[49,325,326,337,343],{},[52,327,328,331,332,336],{},[41,329,330],{},"Contracts and warranties"," outlive the tax window and can matter in a dispute. Notes on ",[110,333,335],{"href":334},"\u002Fwhat-to-do-when-a-client-wont-pay","what to do when a client won't pay"," become far stronger with the original invoice, terms, and payment reminders on file.",[52,338,339,342],{},[41,340,341],{},"Asset records"," for anything you might sell later (equipment, property, goodwill) support the eventual gain or loss calculation.",[52,344,345,348],{},[41,346,347],{},"Loss carryforwards"," mean the \"year\" a record supports can be well in the future. If you're carrying a loss forward five years, the records that created it stay relevant that whole time.",[16,350,351],{},"When in doubt, storage is cheap and reconstruction is expensive. A well-organised digital archive costs almost nothing to keep for a couple of extra years.",[11,353,355],{"id":354},"a-simple-retention-policy-you-can-adopt","A simple retention policy you can adopt",[357,358,359,370,373,376,379],"ol",{},[52,360,361,362,365,366,369],{},"Default to your country's longest common period: ",[41,363,364],{},"6 years"," (US safe side, UK companies\u002FVAT, Canada) or ",[41,367,368],{},"5 years"," (UK sole traders, Australia). Holding everything for 6–7 years covers almost every ordinary case across all four jurisdictions.",[52,371,372],{},"Never delete records tied to an open audit, objection, or dispute.",[52,374,375],{},"Keep asset and property records until the retention period after you dispose of the item.",[52,377,378],{},"Store digitally with a backup, capture receipts at the moment of purchase, and export your books once a year.",[52,380,381],{},"Confirm the current rules with your tax authority or accountant before destroying anything, since periods and thresholds do change.",[16,383,384],{},"Set a recurring reminder each year to purge the batch that has genuinely aged out, and only that batch. That single habit keeps you compliant without turning your files into a landfill.",{"title":386,"searchDepth":387,"depth":387,"links":388},"",3,[389,391,397,400,401,402],{"id":13,"depth":390,"text":14},2,{"id":27,"depth":390,"text":28,"children":392},[393,394,395,396],{"id":35,"depth":387,"text":36},{"id":86,"depth":387,"text":87},{"id":125,"depth":387,"text":126},{"id":154,"depth":387,"text":155},{"id":177,"depth":390,"text":178,"children":398},[399],{"id":256,"depth":387,"text":257},{"id":263,"depth":390,"text":264},{"id":319,"depth":390,"text":320},{"id":354,"depth":390,"text":355},"Tax & Compliance","2026-07-21",null,"How many years freelancers and small businesses must keep invoices and receipts in the US, UK, Canada, and Australia, plus digital storage rules.","md",false,{},true,"\u002Fhow-long-to-keep-invoices-and-receipts","7 min read",{"title":5,"description":406},{"loc":411},"how-long-to-keep-invoices-and-receipts","VEjWz0s4tfx6LJzLTz_q2zWayDAOcgOQvJqT0dq6s7M",[418,852],{"id":419,"title":420,"author":6,"body":421,"category":842,"date":843,"dek":405,"description":844,"extension":407,"featured":408,"meta":845,"navigation":410,"path":846,"readingTime":847,"seo":848,"sitemap":849,"stem":850,"__hash__":851},"content\u002Fhow-to-bill-clients-for-expenses.md","How to Bill Clients for Expenses: Reimbursable Expenses on Invoices",{"type":8,"value":422,"toc":829},[423,427,430,437,440,444,447,460,463,483,486,490,493,499,505,512,515,519,522,527,664,670,673,681,685,695,699,714,724,735,739,747,751,763,774,778,784,787,791,826],[11,424,426],{"id":425},"what-counts-as-a-reimbursable-expense-and-what-doesnt","What counts as a reimbursable expense (and what doesn't)",[16,428,429],{},"A reimbursable expense is a cost you incur on a project that the client has agreed to pay back. You front the money, then recharge it. Classic examples: a train fare to a client site, a stock photo licence bought for their brochure, a domain and hosting plan set up in their name, or a specialist subcontractor you hired to finish part of the job.",[16,431,432,433,436],{},"What is ",[80,434,435],{},"not"," reimbursable is your ordinary cost of being in business. Your laptop, your accounting software subscription, your home office internet, your professional insurance — those are overhead. You recover them through your rate, not by itemising them on a client invoice. The line matters because clients push back hard when they see costs they consider \"your problem\" appearing on a bill.",[16,438,439],{},"The cleanest test: would this cost exist if the project didn't? A flight booked specifically for one client's workshop fails the \"would exist anyway\" test, so it's reimbursable. Your Adobe subscription would exist regardless, so it's overhead.",[11,441,443],{"id":442},"agree-the-rules-before-you-spend-a-penny","Agree the rules before you spend a penny",[16,445,446],{},"Most expense disputes are really scope disputes that surfaced late. Kill them in the contract or proposal. A short clause is enough:",[448,449,450],"blockquote",{},[16,451,452],{},[80,453,454,455,459],{},"Expenses: The Client will reimburse pre-approved out-of-pocket costs incurred on this project, including travel, accommodation, third-party software licences, and subcontractor fees. Costs above $150 per item require written approval in advance. Expenses are billed at cost and supported by receipts. Mileage is charged at ",[456,457,458],"span",{},"rate"," per mile.",[16,461,462],{},"Three things that clause does for you:",[49,464,465,471,477],{},[52,466,467,470],{},[41,468,469],{},"Sets an approval threshold."," Anything above the limit needs a yes in writing. Below it, you're covered to just spend and recharge.",[52,472,473,476],{},[41,474,475],{},"States the markup policy up front"," (here, \"at cost\" — no markup). Decide this deliberately; more on markup below.",[52,478,479,482],{},[41,480,481],{},"Requires receipts",", which signals you'll keep clean records and pre-empts the \"can you prove that?\" conversation.",[16,484,485],{},"Get the client to confirm expensive items by email before you commit. A one-line \"Booking the Tuesday flight at £142, confirming that's approved\" costs you nothing and turns a possible fight into a paper trail.",[11,487,489],{"id":488},"to-mark-up-or-not-to-mark-up","To mark up or not to mark up",[16,491,492],{},"There are two honest positions, and clients treat them very differently.",[16,494,495,498],{},[41,496,497],{},"Billing at cost (pass-through)."," You recharge exactly what you paid. A £142 flight becomes a £142 line. This is the norm for genuine third-party disbursements and it builds trust because there's nothing to argue about. The downside: you carry the cash-flow burden and admin for free.",[16,500,501,504],{},[41,502,503],{},"Adding a handling markup."," Some agencies add 10–20% to expenses to cover the time spent booking, coordinating, and financing the cost. This is legitimate as long as it's disclosed. What damages relationships is a hidden markup a client discovers by seeing the original receipt. If you mark up, either state the percentage in your contract or fold the handling into a separate \"coordination fee\" line rather than inflating the receipt total.",[16,506,507,508,511],{},"A middle path many freelancers use: pass genuine disbursements through at cost, but bill your own ",[80,509,510],{},"time"," spent managing a subcontractor or sourcing materials as normal billable hours. That keeps the expense honest and still pays you for the work.",[16,513,514],{},"For mileage, use your tax authority's standard rate as a defensible number rather than guessing. In the US the IRS sets an annual business mileage rate; the UK uses HMRC approved mileage allowance payments (commonly quoted as 45p per mile for the first 10,000 miles); Canada and Australia publish their own per-kilometre figures. These change, so check the current rate for your country each tax year.",[11,516,518],{"id":517},"how-to-list-expenses-on-the-invoice","How to list expenses on the invoice",[16,520,521],{},"Keep expenses visually distinct from your fees. Clients scan invoices, and burying a £600 subcontractor cost inside your service total invites suspicion. Two structures work well.",[16,523,524],{},[41,525,526],{},"Option A — a dedicated expenses block:",[528,529,530,549],"table",{},[531,532,533],"thead",{},[534,535,536,540,543,546],"tr",{},[537,538,539],"th",{},"Description",[537,541,542],{},"Qty",[537,544,545],{},"Rate",[537,547,548],{},"Amount",[550,551,552,567,580,593,605,617,632,648],"tbody",{},[534,553,554,558,561,564],{},[555,556,557],"td",{},"Web design services (June)",[555,559,560],{},"22 hrs",[555,562,563],{},"$85",[555,565,566],{},"$1,870.00",[534,568,569,574,576,578],{},[555,570,571],{},[41,572,573],{},"Reimbursable expenses",[555,575],{},[555,577],{},[555,579],{},[534,581,582,585,588,591],{},[555,583,584],{},"Stock photography licence (invoice #A-2231)",[555,586,587],{},"1",[555,589,590],{},"$79.00",[555,592,590],{},[534,594,595,598,600,603],{},[555,596,597],{},"Return train fare, London↔Bristol (12 Jun)",[555,599,587],{},[555,601,602],{},"$64.00",[555,604,602],{},[534,606,607,610,612,615],{},[555,608,609],{},"Subcontractor: copywriting (J. Okafor)",[555,611,587],{},[555,613,614],{},"$450.00",[555,616,614],{},[534,618,619,624,626,628],{},[555,620,621],{},[41,622,623],{},"Subtotal — services",[555,625],{},[555,627],{},[555,629,630],{},[41,631,566],{},[534,633,634,639,641,643],{},[555,635,636],{},[41,637,638],{},"Subtotal — expenses",[555,640],{},[555,642],{},[555,644,645],{},[41,646,647],{},"$593.00",[534,649,650,655,657,659],{},[555,651,652],{},[41,653,654],{},"Total",[555,656],{},[555,658],{},[555,660,661],{},[41,662,663],{},"$2,463.00",[16,665,666,669],{},[41,667,668],{},"Option B — a separate expenses invoice"," entirely, cross-referenced to the project. Useful when expenses are large or arrive on a different timeline than your fees, and when a client's accounts team codes reimbursements to a different budget.",[16,671,672],{},"Either way, name the specific supplier, date, and purpose on each line. \"Travel — $64\" is weak. \"Return train fare, London↔Bristol, 12 Jun client workshop — $64\" gets approved without a follow-up email. Attach the underlying receipts as a PDF; don't wait to be asked.",[16,674,675,676,680],{},"If you're building invoices by hand, the layout principles in ",[110,677,679],{"href":678},"\u002Fhow-to-make-an-invoice-in-excel-word-google-docs","how to make an invoice in Excel, Word or Google Docs"," apply here too — a clean expenses subtotal is just another block.",[11,682,684],{"id":683},"the-vat-and-sales-tax-part-people-get-wrong","The VAT and sales-tax part people get wrong",[16,686,687,688,691,692,101],{},"This is where recharging expenses gets genuinely technical, and the rules differ by tax and by country. Two concepts get confused constantly: ",[41,689,690],{},"recharges"," and ",[41,693,694],{},"disbursements",[33,696,698],{"id":697},"recharges-vs-disbursements-vat-registered-businesses","Recharges vs disbursements (VAT-registered businesses)",[16,700,701,702,705,706,709,710,713],{},"A ",[41,703,704],{},"recharge"," is a cost you incurred ",[80,707,708],{},"for your own business"," in order to deliver the service, which you then pass on. Your train fare to a client meeting is your cost — you bought the ticket, you travelled. When you recharge it, it becomes part of the consideration for your service, so in the UK and similar VAT systems you generally add VAT to it at your service rate, ",[80,711,712],{},"even if the original ticket was zero-rated or VAT-exempt",". That surprises people: a zero-rated train fare recharged to a client typically gets 20% VAT added because it's now part of your taxable supply.",[16,715,701,716,719,720,723],{},[41,717,718],{},"disbursement"," is a cost you paid ",[80,721,722],{},"as the client's agent"," — the goods or services were supplied to the client, not to you, and you merely handled the payment. A statutory fee (say, a companies-registry filing fee paid on the client's behalf) can qualify. Disbursements are passed on at exact cost with no VAT added by you, but they must meet strict conditions: the client received the supply, you were acting as their agent, and you show the cost separately. Getting this wrong means under- or over-charging VAT.",[16,725,726,727,730,731,734],{},"Practical takeaway for UK and EU-style VAT: most of what freelancers call \"expenses\" are actually recharges, not disbursements, so you add VAT. Read ",[110,728,729],{"href":117},"UK VAT invoices explained"," and, if you're near the threshold, ",[110,732,733],{"href":112},"do I need to register for VAT",". Rules vary — confirm your specific situation with HMRC or an accountant.",[33,736,738],{"id":737},"us-sales-tax","US sales tax",[16,740,741,742,746],{},"Whether a reimbursed expense is taxable depends on the state and on whether the underlying item was taxable and how it's characterised. Reimbursed costs that are part of a bundled taxable service can be taxable; a separately stated pass-through of a non-taxable item may not be. There's no single national rule. The overview in ",[110,743,745],{"href":744},"\u002Fus-sales-tax-on-invoices","US sales tax on invoices"," is a starting point, but check your state.",[33,748,750],{"id":749},"canada-and-australia","Canada and Australia",[16,752,753,754,758,759,762],{},"For GST\u002FHST in Canada, recharged expenses generally follow the tax treatment of your overall supply; see ",[110,755,757],{"href":756},"\u002Fcanada-gst-hst-invoice-requirements","Canada GST\u002FHST invoice requirements",". In Australia, GST on reimbursements versus true disbursements follows a similar agent-vs-principal logic to the UK; a valid ",[110,760,761],{"href":172},"tax invoice"," still needs the right GST breakdown.",[16,764,765,766,769,770,773],{},"One more trap: ",[41,767,768],{},"don't double-count VAT\u002FGST you've already reclaimed."," If you're VAT-registered and reclaimed the input tax on that £79 stock photo, you recharge the £79 net (pre-VAT) figure and add your own VAT on top. Recharging the VAT-inclusive amount ",[80,771,772],{},"and"," adding VAT again overcharges the client.",[11,775,777],{"id":776},"keep-the-receipts-and-keep-them-findable","Keep the receipts, and keep them findable",[16,779,780,781,101],{},"Every recharged cost needs a supporting document you can produce on demand: the supplier invoice, the ticket, the mileage log. Tax authorities can ask you to justify both the expense you claimed and the amount you recharged. Retention periods vary (commonly several years), so store them with the project. The practical mechanics are covered in ",[110,782,783],{"href":411},"how long to keep invoices and receipts",[16,785,786],{},"A simple system: create a folder per project, drop every receipt in as you incur it, and log the date, supplier, amount, and whether tax was charged in a spreadsheet. When invoice day arrives the expenses block writes itself.",[11,788,790],{"id":789},"handling-the-awkward-cases","Handling the awkward cases",[49,792,793,799,809,820],{},[52,794,795,798],{},[41,796,797],{},"The client rejects an expense after the fact."," If it was under your approval threshold and inside the contract's categories, point to the clause. If it was over the threshold and you didn't get sign-off, you may have to eat it — which is exactly why the threshold exists.",[52,800,801,804,805,808],{},[41,802,803],{},"A subcontractor you're recharging."," You're the principal: you hired them, you pay them, you recharge the client. Their invoice is addressed to ",[80,806,807],{},"you",", and you issue your own invoice to the client. Don't just forward the sub's invoice.",[52,810,811,814,815,819],{},[41,812,813],{},"Foreign-currency expenses on an overseas project."," Convert at the rate on the date you paid, note the rate, and be consistent. ",[110,816,818],{"href":817},"\u002Fhow-to-invoice-international-clients","Invoicing international clients"," covers the currency and payment side.",[52,821,822,825],{},[41,823,824],{},"Expenses that arrive after final payment."," Bill them promptly on a short-dated invoice rather than sitting on them. A late \"oh, and there's also £200 of expenses\" three months on reads as disorganised and gets queried.",[16,827,828],{},"Recharging expenses well is mostly about being boringly transparent: agree the rules in writing, spend inside the agreed limits, itemise clearly, attach the receipts, and apply the right tax treatment for your jurisdiction. Do that and expenses stop being a source of friction and become just another clean line on the invoice.",{"title":386,"searchDepth":387,"depth":387,"links":830},[831,832,833,834,835,840,841],{"id":425,"depth":390,"text":426},{"id":442,"depth":390,"text":443},{"id":488,"depth":390,"text":489},{"id":517,"depth":390,"text":518},{"id":683,"depth":390,"text":684,"children":836},[837,838,839],{"id":697,"depth":387,"text":698},{"id":737,"depth":387,"text":738},{"id":749,"depth":387,"text":750},{"id":776,"depth":390,"text":777},{"id":789,"depth":390,"text":790},"Invoicing Basics","2026-07-29","How to recharge travel, materials, software and subcontractor costs to clients, whether to add markup, and how VAT and sales-tax rules apply.",{},"\u002Fhow-to-bill-clients-for-expenses","8 min read",{"title":420,"description":844},{"loc":846},"how-to-bill-clients-for-expenses","RpKUmFUK7kvh-_hOs2fJkgj3NKtNotmV5Fped0xpX-s",{"id":853,"title":854,"author":6,"body":855,"category":842,"date":1357,"dek":405,"description":1358,"extension":407,"featured":408,"meta":1359,"navigation":410,"path":1360,"readingTime":847,"seo":1361,"sitemap":1362,"stem":1363,"__hash__":1364},"content\u002Fwhat-is-progress-billing.md","What Is Progress Billing? How to Invoice a Project in Stages",{"type":8,"value":856,"toc":1347},[857,861,864,867,880,884,887,907,914,920,926,929,933,936,939,1077,1088,1092,1095,1112,1115,1118,1177,1180,1187,1191,1194,1200,1216,1222,1227,1230,1236,1242,1246,1249,1254,1262,1267,1287,1290,1294,1297,1334,1338,1341,1344],[11,858,860],{"id":859},"getting-paid-before-the-project-ends","Getting paid before the project ends",[16,862,863],{},"A web build quoted at $18,000 takes four months. If you invoice once at the end, you're effectively lending the client the cost of a third of a year's work, absorbing every scope change and stall, and betting your cash flow on a single payment that may arrive 30 days after the final sign-off. That's month five before a dollar lands.",[16,865,866],{},"Progress billing fixes this. Instead of one invoice, you break the project into stages and bill for each as you complete it. The client pays as value is delivered; you fund the work as you go. It's the standard model in construction, engineering, and large creative or software projects, and it scales down neatly to a solo freelancer running a $6,000 branding job.",[16,868,869,870,874,875,879],{},"This is different from a one-off ",[110,871,873],{"href":872},"\u002Fhow-to-ask-for-a-deposit-upfront-invoices","deposit invoice"," or a fixed monthly ",[110,876,878],{"href":877},"\u002Frecurring-and-retainer-invoices","retainer",". A deposit is a single upfront payment. A retainer bills a recurring fee regardless of specific deliverables. Progress billing charges incrementally against measurable chunks of one large project as they're finished.",[11,881,883],{"id":882},"how-progress-billing-actually-works","How progress billing actually works",[16,885,886],{},"Every progress-billed project rests on three decisions you make before you start:",[357,888,889,895,901],{},[52,890,891,894],{},[41,892,893],{},"The total contract value."," The agreed price for the whole job (or a clear rate structure if it's time-and-materials).",[52,896,897,900],{},[41,898,899],{},"The billing triggers."," What event releases each invoice, a calendar date, a completed milestone, or a percentage of work done.",[52,902,903,906],{},[41,904,905],{},"The schedule of values."," A line-by-line breakdown showing how the total is split across stages.",[16,908,909,910,913],{},"Two broad methods exist for deciding ",[80,911,912],{},"when"," to bill:",[16,915,916,919],{},[41,917,918],{},"Milestone billing."," You invoice when a defined deliverable is complete: \"homepage design approved,\" \"database migration signed off.\" Best when the work has clear, discrete stages. Clients like it because they're paying for something they can see.",[16,921,922,925],{},[41,923,924],{},"Percentage-of-completion billing."," You invoice based on how much of the total work is finished, often assessed monthly. A builder might bill for 40% of a job at the end of month two. This suits long, continuous work where deliverables blur together. It requires an honest, defensible way to estimate \"percent complete,\" which is where disputes usually start.",[16,927,928],{},"Most small-business projects use milestones. They're concrete and hard to argue with.",[11,930,932],{"id":931},"building-a-schedule-of-values","Building a schedule of values",[16,934,935],{},"The schedule of values is the backbone. It's a table, agreed in the contract, that both parties reference for the life of the project. Keep the number of stages sensible: too few and you're back to lump-sum risk, too many and you drown in admin.",[16,937,938],{},"Here's a schedule for that $18,000 website, split into five stages plus a deposit:",[528,940,941,958],{},[531,942,943],{},[534,944,945,948,950,953,955],{},[537,946,947],{},"Stage",[537,949,539],{},[537,951,952],{},"% of total",[537,954,548],{},[537,956,957],{},"Trigger",[550,959,960,977,993,1008,1025,1040,1057],{},[534,961,962,965,968,971,974],{},[555,963,964],{},"0",[555,966,967],{},"Mobilisation deposit",[555,969,970],{},"20%",[555,972,973],{},"$3,600",[555,975,976],{},"On contract signing",[534,978,979,981,984,987,990],{},[555,980,587],{},[555,982,983],{},"Discovery & sitemap approved",[555,985,986],{},"15%",[555,988,989],{},"$2,700",[555,991,992],{},"Client sign-off on IA",[534,994,995,998,1001,1003,1005],{},[555,996,997],{},"2",[555,999,1000],{},"Design mockups approved",[555,1002,970],{},[555,1004,973],{},[555,1006,1007],{},"Client sign-off on designs",[534,1009,1010,1013,1016,1019,1022],{},[555,1011,1012],{},"3",[555,1014,1015],{},"Development complete (staging)",[555,1017,1018],{},"25%",[555,1020,1021],{},"$4,500",[555,1023,1024],{},"Site live on staging server",[534,1026,1027,1030,1033,1035,1037],{},[555,1028,1029],{},"4",[555,1031,1032],{},"Testing, revisions, launch",[555,1034,986],{},[555,1036,989],{},[555,1038,1039],{},"Site live on production",[534,1041,1042,1045,1048,1051,1054],{},[555,1043,1044],{},"5",[555,1046,1047],{},"Retention release",[555,1049,1050],{},"5%",[555,1052,1053],{},"$900",[555,1055,1056],{},"30 days after launch, no defects",[534,1058,1059,1061,1065,1070,1075],{},[555,1060],{},[555,1062,1063],{},[41,1064,654],{},[555,1066,1067],{},[41,1068,1069],{},"100%",[555,1071,1072],{},[41,1073,1074],{},"$18,000",[555,1076],{},[16,1078,1079,1080,1083,1084,1087],{},"Notice stage 5. That's ",[41,1081,1082],{},"retainage"," (also called retention), a slice of the total held back until after final delivery to guarantee you fix defects. It's ingrained in construction, where 5–10% is typical, and it's increasingly reasonable for larger creative and software work. As the contractor being billed ",[80,1085,1086],{},"against",", you want retainage low and released quickly; as the party doing the work, you accept it because it reassures a nervous client. State the release condition precisely: \"5% retained, payable 30 days after production launch provided no critical defects remain open.\"",[11,1089,1091],{"id":1090},"what-goes-on-each-progress-invoice","What goes on each progress invoice",[16,1093,1094],{},"A progress invoice looks like a normal invoice with a few extra fields that show where this payment sits in the bigger picture. Every one should show:",[49,1096,1097,1100,1103,1106,1109],{},[52,1098,1099],{},"The overall contract value",[52,1101,1102],{},"This stage's amount (the \"current claim\")",[52,1104,1105],{},"Total billed to date, including this invoice",[52,1107,1108],{},"Total remaining after this invoice",[52,1110,1111],{},"Any retainage held",[16,1113,1114],{},"That running tally prevents the most common progress-billing argument: the client losing track of what they've already paid.",[16,1116,1117],{},"Here's how a stage 2 invoice might read:",[448,1119,1120,1126,1167,1174],{},[16,1121,1122,1125],{},[41,1123,1124],{},"Invoice #2026-034","\nProject: Website redesign — Contract value $18,000",[528,1127,1128,1137],{},[531,1129,1130],{},[534,1131,1132,1135],{},[537,1133,1134],{},"Line item",[537,1136,548],{},[550,1138,1139,1147,1155],{},[534,1140,1141,1144],{},[555,1142,1143],{},"Stage 2: Design mockups approved (20% of contract)",[555,1145,1146],{},"$3,600.00",[534,1148,1149,1152],{},[555,1150,1151],{},"Less retainage (5% of this claim)",[555,1153,1154],{},"–$180.00",[534,1156,1157,1162],{},[555,1158,1159],{},[41,1160,1161],{},"Amount due this invoice",[555,1163,1164],{},[41,1165,1166],{},"$3,420.00",[16,1168,1169,1170,1173],{},"Contract value: $18,000.00\nPreviously billed (stages 0–1): $6,300.00\nThis claim: $3,600.00\n",[41,1171,1172],{},"Billed to date: $9,900.00 (55%)","\nRetainage held to date: $495.00\nRemaining to bill: $8,100.00",[16,1175,1176],{},"Payment terms: Net 14. Work on stage 3 begins on receipt.",[16,1178,1179],{},"Whether you deduct retainage from each claim or hold it all in a final stage is a style choice; both are fine as long as the contract and the invoice math agree. Deducting a little from each claim (as above) is cleaner because the client always sees the running retention figure.",[16,1181,1182,1183,1186],{},"Number your invoices in a consistent sequence so the project's billing history is auditable. If you juggle several clients, see ",[110,1184,1185],{"href":192},"invoice numbering best practices"," for a scheme that won't collapse under multiple projects.",[11,1188,1190],{"id":1189},"contract-wording-that-protects-you","Contract wording that protects you",[16,1192,1193],{},"Progress billing lives or dies by what's written before work starts. The schedule of values belongs in the signed contract or statement of work, not buried in an email. Include clauses covering:",[16,1195,1196,1199],{},[41,1197,1198],{},"The trigger definition."," Vague triggers cause disputes. \"Design phase complete\" invites argument; \"Client provides written approval of homepage and two interior page mockups via email or project tool\" does not.",[16,1201,1202,1205,1206,1210,1211,1215],{},[41,1203,1204],{},"Payment terms per stage."," Short terms suit staged work. Net 7 to Net 14 is common; some freelancers use ",[110,1207,1209],{"href":1208},"\u002Fdue-on-receipt-payment-terms","due on receipt"," for deposits and early stages. Whatever you pick, spell out your ",[110,1212,1214],{"href":1213},"\u002Fhow-to-charge-late-fees-on-overdue-invoices","late fee"," policy too.",[16,1217,1218,1221],{},[41,1219,1220],{},"A stop-work clause."," The single most valuable line in a progress-billing contract:",[448,1223,1224],{},[16,1225,1226],{},"\"Work on the subsequent stage will not commence until payment for the preceding stage has been received in full. Timelines extend automatically by any period of delayed payment.\"",[16,1228,1229],{},"This turns your invoice into a gate. No payment, no progress. It's the natural leverage staged billing gives you, and it beats chasing an $18,000 balance at the end.",[16,1231,1232,1235],{},[41,1233,1234],{},"Scope-change handling."," When the client adds work mid-project, don't quietly absorb it into an existing stage. Issue a change order that adjusts the contract value and, if needed, adds a stage. Revised schedule of values, signed, then carry on.",[16,1237,1238,1241],{},[41,1239,1240],{},"Deposit and retainage terms."," State the deposit amount, whether it's refundable, and how it's applied (usually credited against stage 0 or spread across the first stages). State the retainage percentage and its precise release condition.",[11,1243,1245],{"id":1244},"a-worked-cash-flow-comparison","A worked cash-flow comparison",[16,1247,1248],{},"The point of all this is timing. Same $18,000 project, two approaches:",[16,1250,1251],{},[41,1252,1253],{},"Lump-sum, Net 30, invoiced at completion (month 4):",[49,1255,1256,1259],{},[52,1257,1258],{},"Cash in: $0 until roughly day 150",[52,1260,1261],{},"You self-fund four months of work",[16,1263,1264],{},[41,1265,1266],{},"Progress-billed against the schedule above:",[49,1268,1269,1272,1275,1278,1281,1284],{},[52,1270,1271],{},"Month 0: $3,600 deposit",[52,1273,1274],{},"Month 1: $2,700 (stage 1)",[52,1276,1277],{},"Month 2: $3,420 (stage 2, net of retainage)",[52,1279,1280],{},"Month 3: $4,275 (stage 3, net of retainage)",[52,1282,1283],{},"Month 4: $2,565 (stage 4, net of retainage)",[52,1285,1286],{},"Month 5: $2,340 (stage 5 + accumulated retainage $900)",[16,1288,1289],{},"By the end of month 2 you've collected $9,720 on a project you're only a bit over halfway through delivering. That's the difference between a healthy freelance business and one perpetually one late invoice away from trouble.",[11,1291,1293],{"id":1292},"tax-and-record-keeping-notes","Tax and record-keeping notes",[16,1295,1296],{},"A few things to get right, and rules vary by jurisdiction, so confirm with your tax authority or an accountant:",[49,1298,1299,1319,1325],{},[52,1300,1301,1304,1305,1307,1308,1310,1311,1314,1315,1318],{},[41,1302,1303],{},"When to recognise income and charge sales tax\u002FVAT"," usually depends on when each invoice is issued or paid, not on when the whole project finishes. If you're VAT-registered in the UK, each progress invoice is generally a tax point in its own right; see ",[110,1306,729],{"href":117},". US sales tax on services varies by state, covered in ",[110,1309,745],{"href":744},". Canadian GST\u002FHST has its own ",[110,1312,1313],{"href":756},"invoice requirements",", and Australian ",[110,1316,1317],{"href":172},"tax invoices"," have set fields.",[52,1320,1321,1324],{},[41,1322,1323],{},"Deposits can be treated differently from progress claims"," for tax purposes in some jurisdictions. Don't assume they're the same.",[52,1326,1327,1330,1331,1333],{},[41,1328,1329],{},"Keep every progress invoice, change order, and sign-off email"," for the whole project and beyond. Guidance on ",[110,1332,783],{"href":411}," applies here.",[11,1335,1337],{"id":1336},"when-progress-billing-isnt-worth-it","When progress billing isn't worth it",[16,1339,1340],{},"Skip it for anything short or small. A $900 logo delivered in a week doesn't need five invoices, take a deposit and bill the balance. Progress billing carries admin overhead: more invoices, more approvals, more tracking. The break-even point is roughly a project long enough or large enough that carrying the full cost to completion would strain your cash or your nerves.",[16,1342,1343],{},"It also demands a client who signs a proper contract and approves stages promptly. If sign-offs are the bottleneck, add a clause deeming a stage approved if the client doesn't respond within, say, five business days. Otherwise your carefully staged cash flow stalls on someone else's inbox.",[16,1345,1346],{},"Structure the stages, define the triggers in writing, and let each paid invoice unlock the next slice of work. The project funds itself, and you never carry more risk than the current stage.",{"title":386,"searchDepth":387,"depth":387,"links":1348},[1349,1350,1351,1352,1353,1354,1355,1356],{"id":859,"depth":390,"text":860},{"id":882,"depth":390,"text":883},{"id":931,"depth":390,"text":932},{"id":1090,"depth":390,"text":1091},{"id":1189,"depth":390,"text":1190},{"id":1244,"depth":390,"text":1245},{"id":1292,"depth":390,"text":1293},{"id":1336,"depth":390,"text":1337},"2026-07-27","A practical guide to milestone and staged invoicing for freelancers and contractors, covering deposits, progress claims, retainage, and sample wording.",{},"\u002Fwhat-is-progress-billing",{"title":854,"description":1358},{"loc":1360},"what-is-progress-billing","1f7Wj81KqhhKD9NyCFT0w5kd8bObLSynWMtfQE4jWeY",1785314447430]