A deposit invoice bills part of an agreed project price before work starts, commonly 50%, and a final invoice later bills the balance. The deposit invoice should name the project, the total price, the deposit percentage and amount, when the balance is due and whether the deposit is refundable. The final invoice should show the full price, the deposit already paid with its date and invoice number, and the balance due. You can make both in Word, Google Docs or a spreadsheet. In BillBee.work, a free invoice maker for freelancers, the deposit is a fixed-amount line, and because there are no negative lines, the final invoice uses a fixed 'Balance due' line that spells out the total and the deposit paid.
On this page
- Why and when to ask for a deposit
- What are common deposit splits?
- How to write a deposit invoice in Word or Google Docs
- A sample deposit invoice
- How to show the deposit on the final invoice
- Should a deposit be refundable?
- When does a deposit count for tax?
- How to bill a deposit and balance in BillBee.work
- Deposit invoice mistakes to avoid
You have agreed a $6,000 website project. Before you block out six weeks and turn other work away, you want part of it paid. That means two invoices: a deposit invoice now, and a final invoice for the balance when the work is done. Both need to be worded so the client's accounts team, and your own records, never confuse one for the other.
This guide covers when to ask for a deposit, the usual splits, what each invoice should say, samples of both, refund terms and tax timing. For the full invoicing process, see how to invoice as a freelancer.
Why and when to ask for a deposit#
A deposit does three jobs. It confirms the client is serious, it pays you for the time you are holding, and it covers costs you take on before delivery. It is worth asking for when:
- The client is new and you have no payment history with them.
- You are reserving dates, such as a shoot, a workshop or a block of weeks, and turning down other work to do it.
- You have upfront costs, such as travel, licences, stock assets or materials.
- The project is long, so waiting until the end means weeks of unpaid work.
You can skip it for small, quick jobs with clients who always pay on time. Asking for a deposit is one of the simplest habits for getting paid reliably; how to get clients to pay on time covers the rest.
A deposit is not the same as a retainer. A deposit is part of one project's price, paid early and deducted from the final bill. A retainer is an ongoing monthly fee: see retainer invoices.
What are common deposit splits?#
There is no standard split. These are common arrangements, shown on a $6,000 project:
| Split | When it fits | On a $6,000 project |
|---|---|---|
| 50/50 | Most fixed-price projects of a few weeks | $3,000 before you start, $3,000 on delivery |
| 30/40/30 | Longer projects with a clear midpoint | $1,800, then $2,400 at the midpoint, then $1,800 |
| 25% plus milestones | Multi-month projects with defined stages | $1,500 upfront, then $1,500 at each of three milestones |
| 100% upfront | Small, fast jobs, or new clients with no track record | $6,000 before you start |
| Booking fee | Shoots, events and workshops where you hold a date | A fixed sum, such as $500, with the rest after the date |
Match the deposit to your risk. If the client pulls out halfway, the deposit should cover the work done and the dates you lost. For staged projects, tie each payment to something the client can see, such as signed-off designs, not to a date alone.
How to write a deposit invoice in Word or Google Docs#
1. Start from your normal invoice layout
Use your usual header: your details, the client's details, a new invoice number, the issue date and a due date. A deposit invoice is a real invoice with its own number. UK government guidance, for example, lists a unique identification number, a clear description of what you are charging for and the total amount owed among the things every invoice must include, and a deposit invoice is no exception.
2. Write one clear deposit line
Describe it so nobody can mistake it for the full price: "50% deposit: website redesign (project total $6,000, per proposal of 28 Sep 2026)". Put the deposit amount in the amount column.
3. Say what happens next
Under the total, add two or three short lines: when work starts ("Work begins once the deposit is received"), when the balance is due ("Balance of $3,000 due on launch, invoiced separately"), and your refund terms from the contract.
4. Set a due date before the start date
If work starts on 19 October, make the deposit due a week earlier, so the money has cleared before you begin. Payment terms in general are covered in net 30 payment terms; for a deposit, short terms make sense.
Some businesses send a proforma instead, a request for payment, and issue the actual invoice when the money arrives. If you are registered for VAT or sales tax, check which your local rules expect before you choose.
A sample deposit invoice#
The names and figures are illustrative.
INVOICE LF-202610-001
From: Lena Fischer Web Design, 15 Elm Street, Portland OR
Billed to: Harbour Coffee Co., 200 Pier Road, Seattle WA
Issue date: 5 Oct 2026 Due date: 12 Oct 2026
Description Amount
50% deposit: website redesign $3,000.00
(project total $6,000, per proposal of 28 Sep 2026)
-------------------------------------------------------------
Total due $3,000.00
Work begins once the deposit is received.
Balance of $3,000 due on launch, invoiced separately.
Deposit is non-refundable once design work begins
(proposal, clause 6).
How to show the deposit on the final invoice#
The final invoice should let the client see the whole picture in a few seconds: the full price, what they already paid, and what is left. In Word or a spreadsheet, that means listing the full work and subtracting the deposit:
INVOICE LF-202611-001
From: Lena Fischer Web Design, 15 Elm Street, Portland OR
Billed to: Harbour Coffee Co., 200 Pier Road, Seattle WA
Issue date: 20 Nov 2026 Due date: 4 Dec 2026
Description Amount
Website redesign, per proposal of 28 Sep 2026 $6,000.00
Extra landing page (approved by email, 30 Oct) $600.00
-------------------------------------------------------------
Subtotal $6,600.00
Less deposit paid 9 Oct 2026 (invoice LF-202610-001) -$3,000.00
Balance due $3,600.00
Three details make this work:
- Reference the deposit invoice by number and payment date, so accounts payable can match it in their system.
- List extras on their own lines with the approval date. They are not covered by the deposit.
- Do not halve every line on a single invoice to show the deposit. Half-price lines look like a discount and confuse everyone's records. Two clean invoices are clearer.
Should a deposit be refundable?#
That depends on what you agree, so put it in the contract or proposal and repeat it on the deposit invoice. Common approaches:
- Non-refundable once work starts. The deposit covers the time you reserved and the work done.
- Refundable less work done. If the client cancels, you keep the value of work completed and refund the rest.
- Refundable if you cancel. If you cannot do the job, the client gets the whole deposit back.
Write the rule in plain words and say when it applies. If your clients are consumers rather than businesses, local consumer law may limit what you can keep, so check before relying on a non-refundable clause. This is not legal advice; for large projects, a short review of your contract by a lawyer is money well spent.
When does a deposit count for tax?#
A deposit is usually taxed when you invoice it or receive it, not when you finish the work. A short, country-neutral summary, and check your local rules:
- UK VAT. HMRC says the tax point for an advance payment is the date you issue a VAT invoice for it or the date you receive the payment, whichever comes first. If the client backs out and you keep the deposit, VAT is still due on it.
- EU VAT. The European Commission explains that when a supply is paid for in advance, VAT is chargeable when the payment is received, on the amount received.
- US income tax. Under the cash method, you include income in the year you actually or constructively receive it, and the IRS says advance payments are generally reported in the year received. A deposit paid in December for January work usually counts in December's tax year.
If you charge VAT or GST, charge it on the deposit invoice and again on the balance invoice. Each invoice carries tax on its own amount, so together they add up to the tax on the whole project.
How to bill a deposit and balance in BillBee.work#
BillBee.work, a free invoice maker for freelancers, does not have a separate deposit invoice type, and it has no negative or credit lines. You make the deposit and the balance as two ordinary invoices, worded clearly:
- The deposit invoice. Add one fixed line: "50% deposit: website redesign (project total $6,000, proposal 28 Sep)" at $3,000. The due date defaults to 7 days after today; set it so the money arrives before your start date.
- Share and track it. Send the link yourself in an email or chat; the client opens it without an account, and on Pro they can download a PDF. When the money arrives, mark the invoice paid. If it does not arrive by the due date, it is marked overdue automatically.
- The balance invoice. Because you cannot subtract the deposit, add a fixed line that spells it out: "Balance due: website redesign (project total $6,000 less $3,000 deposit paid 9 Oct, invoice LF-202610-001)" at $3,000. Add agreed extras as their own lines, such as a fixed $600 for the extra landing page, or a daily line for extra days. The total is $3,600.
- Milestones. Make one invoice per milestone, each with a fixed line naming the stage and the project total.
- Tax. If you have set a named tax such as VAT on the client, switch it on for both invoices; it is applied to each invoice's subtotal.
Keeping deposit and balance as separate invoices also suits the way BillBee.work tracks status. It does not record partial payments, so each invoice is simply pending, paid or overdue, and your dashboard shows what is still outstanding. Refund terms and "work begins once the deposit is received" go in the line description, since there is no notes field.
Deposit invoice mistakes to avoid#
| Mistake | What happens | Fix |
|---|---|---|
| Starting before the deposit clears | You carry the risk the deposit was meant to remove | Make the start date depend on payment |
| Final invoice for the full price | The client is asked to pay twice and queries it | Show the deposit paid and bill the balance |
| No reference to the deposit invoice | Accounts payable cannot match the two | Quote its number and payment date |
| Refund terms only in your head | An argument if the client cancels | Put them in the contract and on the invoice |
| Extras folded into the balance | The client disputes the total | List extras on their own lines with approval dates |
| No tax on the deposit when you are registered | A correction later | Charge tax on each invoice's own amount |
Agree the split in writing, invoice the deposit before you start, and make the final invoice tell the whole story. Do that and the balance is usually the easiest invoice you send.
Sources
- HMRC: VAT on instalments, deposits and credit sales (checked October 2026)
- European Commission: VAT chargeable event, payments on account (checked October 2026)
- IRS: Publication 538, Accounting Periods and Methods (checked October 2026)
- GOV.UK: Invoicing and taking payment from customers, what an invoice must include (checked October 2026)
This guide is general information, not tax or legal advice. Rules differ by country; check with your local tax office or an accountant before relying on it.
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Create your first invoiceQuestions, answered
How much deposit should a freelancer ask for?
There is no fixed rule, but 50% upfront and 50% on delivery is a common split for projects of a few weeks. Longer projects often use a smaller deposit plus milestone payments, and small jobs for new clients are sometimes paid in full upfront. Choose an amount that covers your costs and the time you are reserving.
Is a deposit invoice a real invoice?
Yes. A deposit invoice is a normal invoice with its own number, dates and payment details, for part of the project price. Some businesses send a proforma request for payment first instead, so if you are registered for VAT or sales tax, check which your local rules expect.
How do I show a deposit on the final invoice?
List the full project price and any agreed extras, then subtract the deposit with its payment date and invoice number, and show the balance due. If your invoicing tool cannot subtract, use one line that spells it out, such as "Balance due: project total $6,000 less $3,000 deposit paid 9 Oct".
Is a deposit refundable?
Only if your agreement says so. Common terms are non-refundable once work starts, refundable less the value of work done, or fully refundable if you cancel. Put the rule in your contract and on the deposit invoice, and check local consumer rules if your clients are individuals.
What is the difference between a deposit and a retainer?
A deposit is part of one project price paid before work starts and deducted from the final invoice. A retainer is a recurring fee, usually monthly, for an ongoing block of time or work. They are billed differently and should be described differently on the invoice.
Do I charge VAT or sales tax on a deposit?
If you are registered, usually yes. In the UK and the EU, VAT on an advance payment is generally due when you invoice or receive it, so charge it on the deposit invoice and again on the balance. Rules vary by country and state, so check your local guidance.