Should a contractor mark up materials on the invoice?
Yes, and disclose the markup in the contract. A 15–25% materials markup is standard and covers sourcing, transportation, return-trip waste, and the time you spent at the supply yard. Some contractors invoice "materials at cost" and bake the markup into a higher labour rate; others itemise materials with the markup on each line. Either is fine: pick one approach and use it consistently so clients don't feel the rules change between projects.
How do contractors handle change orders on invoices?
Document every change order in writing BEFORE the work happens: a one-page signed form is enough. Then on the next invoice, list each approved change order as its own line item with the CO number ("Change order CO-002: replace hardwood with engineered, +$1,400"). Never bury change costs in inflated existing line items; that erodes trust and gives the client an excuse to dispute the whole invoice.
What payment schedule should contractors use for larger projects?
Progress payments tied to milestones rather than calendar dates. A common arrangement is 25–30% deposit at signing, 30–40% mid-project draw (e.g. when framing or rough-in is complete), 25–30% on substantial completion, and a 5–10% retainage held until punch-list items are finished. Inbill's partial-payment tracker handles this against a single invoice: each draw is recorded as it's received, the balance updates automatically.
Do contractors need to charge sales tax, VAT or GST on labour?
It depends entirely on jurisdiction. In most US states, contractor labour on residential improvement is NOT taxable, but materials usually are (you pay the tax when buying, then bill the client at cost-plus). In some states (NY, CT, NJ), labour on capital improvements is exempt but labour on repairs is taxable. The safest practice: register with your state department of revenue, read the specific contractor guidance, and add a tax line on Inbill only where you're required to collect. Outside the US the tax is usually VAT or GST, not sales tax. In the UK, the EU, Australia, New Zealand, India, Pakistan and many other countries you add it only once you are registered for it, at the rate your tax office sets for that service. Check with your tax office or an accountant: this page is general information, not tax advice.
Should I require a deposit before starting a contracting job?
Yes for any job over $1,500 or two days of work. A common arrangement is 25–30% deposit at signing: enough to cover initial materials and protect against the client cancelling after you've scheduled crew time. Some states cap residential contractor deposits by law (California: 10% or $1,000, whichever is less); check local rules. Inbill records the deposit as the first partial payment so the running balance reflects what's actually owed.