Glossary
What is a subtotal?
A subtotal is the sum of an invoice's line items before tax, shipping or adjustments are applied. See how it is calculated, with a worked example.
Updated · By PayToMe Editorial
A subtotal is the sum of all line items on an invoice before tax, shipping, discounts or other adjustments are applied. It is the middle step between individual prices and the final amount due, and it is the number most tax calculations start from.
How it works
Each line item on an invoice has a quantity and a unit price. Multiply them to get the line amount, then add every line amount together. That sum is the subtotal.
After the subtotal, an invoice usually applies a few adjustments in a fixed order:
- Subtotal. Add up all line amounts.
- Discount. Subtract any invoice-level discount, either a flat amount or a percentage.
- Shipping or fees. Add delivery or handling charges if they are billed separately.
- Tax. Calculate sales tax or VAT on the taxable amount.
- Total. Add everything for the amount due.
The order matters. Taking a 10 percent discount before tax gives a different tax figure than taking it afterward. Rules on whether shipping is taxable also vary by place, so confirm yours. Putting the subtotal on its own line makes the math easy for the customer to follow and for your accountant to check.
Rounding is the other common trap. Calculate each line to the cent, then add. Rounding only at the end can leave you a cent away from what the customer’s system computes.
Example
A photographer bills a client for a portrait session. The sales tax rate is 7 percent and the client gets a 10 percent discount on the whole invoice.
You can reproduce this in seconds with the free invoice generator, which calculates every line to the cent. PayToMe’s AI invoicing is in development and will use the same money engine, so the subtotal on a draft always matches what you would compute by hand.
Related terms
- Line item: one priced entry that feeds the subtotal.
- Sales tax: applied after the subtotal and discounts.
- VAT: the equivalent consumption tax in the EU and UK.
- Credit memo: a document that reduces an invoice total after the fact.