How much to ask for
There's no standard figure outside building work. Common practice:
- Work with materials to buy up front: enough to cover the materials, often 20% to 30%.
- Big or long jobs: a deposit, then invoices at agreed stages.
- New clients: a deposit is a fair test of commitment.
Put it in the quote: the amount, when it's due, when each stage is invoiced, and what happens if the job is cancelled.
Building work has limits. For residential building work, most states cap the deposit a builder or tradie can ask for: 10% of the contract price in New South Wales, and 5% or 10% in Victoria and Queensland, depending on the contract price. Check your state's rules before you ask.
The deposit invoice
- Head it Tax Invoice if you're registered for GST.
- One line saying what it is: "Deposit: 30% of quote Q-0042, website design".
- The deposit amount, and the GST on it if you're registered.
- A due date before the work starts.
Progress invoices
- One invoice per agreed stage: "Stage 2 of 3: designs approved".
- Its own number and its own GST.
- A line on where the job stands helps everyone: "Quote total $6,600.00 including GST; invoiced to date $4,620.00, including this invoice".
The final invoice
Invoice the balance, not the whole job again. One line for the balance, with the earlier invoices named in the details, is the clearest way: "Balance: website design. Quote Q-0042, $6,600.00 including GST. Deposit INV-0043 and stage payment INV-0047 already paid." The GST on this invoice is the GST on the balance only, because the GST on the earlier invoices has already been counted.
Worked example
Mara quotes a website at $6,000 plus GST: 30% up front, 40% when the designs are approved, and 30% at launch.
| Invoice | Before GST | GST | Total |
|---|---|---|---|
| INV-0043: deposit, 30% | $1,800.00 | $180.00 | $1,980.00 |
| INV-0047: designs approved, 40% | $2,400.00 | $240.00 | $2,640.00 |
| INV-0052: balance at launch, 30% | $1,800.00 | $180.00 | $1,980.00 |
| Total | $6,000.00 | $600.00 | $6,600.00 |
Three invoices, and their GST adds up to the GST on the whole job.
When the GST is due
- Accounts on a non-cash basis: the GST on each invoice belongs to the BAS period in which you issue the invoice or get paid, whichever comes first.
- Accounts on a cash basis: the GST belongs to the period in which you're paid.
- A security deposit, held against a promise and handed back afterwards, isn't part of the price, so there's no GST on it until you keep it or put it towards the price.
Most deposits small businesses take are part payments, not security deposits. If you're not sure which yours is, the answer is in what your quote says happens to it.