Invoice numbering and tax defaults

Two settings decide how every quote and invoice you send is numbered and how tax lands on it. Both are easy to set once and then forget about, and both are awkward to change later, so they are worth five minutes before your first document goes out.

This article covers your tax rates, the inclusive or exclusive choice, your business number, and the number prefixes and counters behind INV-0001.

Where these settings live

Everything here is on one page: Tax and invoicing, reached from your Account page. It has two cards that matter for this article, Tax rates at the top and Invoice defaults beneath it. Deposits, service charges, currency and bank transfer details also live on that page and have articles of their own.

Your tax rates

A tax rate is a name and a percentage, for example GST at 10, or VAT at 20, or NY State + City at 8.875. You keep as many as you charge.

To add one, type the name and the rate in the Tax rates card and click Add rate. Tick Default if it should be the rate new lines start with. Names can be up to 40 characters, rates go to four decimal places, and you can hold up to 30 rates at once.

A new account starts with a single GST rate at 10% marked as default, so the tax picker is never empty. If that is not the tax you charge, edit it or remove it and add your own.

One rate at a time is the default. The default is the rate applied to every new line you add to a quote, invoice or event's pricing. You can change the rate on any individual line, or set a line to no tax at all, but the default is what saves you doing that on most of them. Click Make default on any rate to move it. Editing a rate's name or percentage never moves the default, so correcting a typo cannot quietly change which rate your lines pick up.

Removing a rate hides it, it does not erase it. Click Remove and the rate disappears from the pickers, while every line and document that already used it carries on showing exactly what it showed before. If the rate you removed was the default, you are left with no default at all, and new lines then come in untaxed until you set one. That is deliberate rather than 1pm guessing a replacement for you, but it is the thing to check straight after removing a rate.

Tax inclusive or tax exclusive

The Amounts are setting in Invoice defaults decides how the prices you type are read:

• Tax inclusive means the tax is already inside the price. Type 110 against a 10% rate and the client pays 110, of which 10 is tax. This is the normal way to price for GST and VAT.
• Tax exclusive means the tax is added on top. Type 100 against an 8.875% rate and the client pays 108.88. This is the normal way to price for US sales tax.

This setting is the default for new quotes and invoices, not a lock. On a draft document there is a Tax dropdown in the Charges and tax strip above the lines, showing Tax Incl. or Tax Excl., and switching it recalculates that document on its own.

Get this right before you start pricing. Switching a document from exclusive to inclusive does not raise your prices to compensate: the same typed figures are simply read the other way, so a 100 line that was billing 108.88 starts billing 100. It is the same trap as changing your currency, which relabels rather than converts.

What a document remembers

When a line is added to a quote or invoice, the tax rate's name and percentage are copied onto that line along with the money. The document is a record of what you charged, not a live view of your settings.

So if your GST rises from 10% to 12.5% and you edit the rate, next month's invoices bill at 12.5% and last month's still read 10%, which is what you want when someone queries an old one. The same is true of a rate you remove: documents that used it are unaffected.

Your business or tax number

Business number label and Business number are a pair, and the label is free text so it reads correctly wherever you operate: ABN and 12 345 678 901, or VAT number and GB123456789, or GST number, or EIN. Both are printed in the header of every invoice you print or share, and updating them here updates every invoice, including ones already issued. Leave both blank if your region does not require it.

Invoice and quote numbers

Numbers are built from two things you control, a prefix and a counter, and 1pm pads the counter to four digits. Prefix INV- with the counter at 1 gives INV-0001, then INV-0002, and so on past INV-9999 without breaking.

There are four fields, two for each document type:

• Invoice number prefix and Quote number prefix, up to 10 characters each. Leave one blank and it falls back to the built-in INV- or QUO-.
• Next invoice number and Next quote number, the number that will be handed out next. The helper text under each field shows the number in full, so you can see INV-0250 before you save it.

Counters only move forward. You can jump ahead, which is the point of the field: an established business that has already issued 249 invoices elsewhere sets Next invoice number to 250 and carries on where it left off, rather than restarting at 0001. You cannot move a counter back, because that would eventually reissue a number that has already gone out to a client.

Invoice and quote prefixes have to differ. Both runs of numbers share one uniqueness rule, so identical prefixes would eventually produce two documents with the same number. Saving with a clash is refused with the message telling you which prefix both are currently set to. Watch the blank case in particular: setting your quote prefix to INV- and leaving your invoice prefix empty is a clash, because empty means INV- too.

Confirmations and credit notes number themselves, as CONF-0001 and CN-0001, and are not configurable.

Why there are gaps in your numbers

A number is taken the moment a document is created, not when you issue or send it. Delete a draft you decided against, and its number goes with it, leaving a gap in the run.

This is normal and no cause for concern. It is also why voiding a quote or invoice exists as a separate action from deleting one: a void keeps the document and its number on file, marked as void, which is what you want for anything a client has already seen.

Setting it up for your region

If you charge GST or VAT, one inclusive rate is usually the whole story:

1. Add one rate named GST or VAT at your percentage, and make it the default.
2. Set Amounts are to Tax inclusive.
3. Fill in your business number and its label.

If you charge US sales tax, you are more likely to want several exclusive rates:

1. Add a rate per jurisdiction you charge in, named so you can tell them apart on the line picker, and make the one you use most the default.
2. Set Amounts are to Tax exclusive.
3. Leave the business number fields blank unless you print an EIN.

Either way, raise one draft invoice afterwards and look at the totals block before you send anything. A wrong tax mode is obvious there and invisible everywhere else.

Related articles

• Quotes and invoices covers the documents these settings apply to, and what happens when one is issued.
• Setting your account currency covers the other account-wide money setting on the same page.
• Service charges and gratuities covers the charge that is taxed at your default rate, and the one that is never taxed.
• Voiding a quote or invoice covers cancelling a document without losing its number.
• Pricing an event covers adding the lines your default rate lands on.