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How to calculate billable hours
- Record the work. Log time while you work, with the client, project, date, and task. A consistent routine is more reliable than rebuilding a timesheet from memory. Stripe’s guide to invoicing hours worked recommends tracking as work happens and organizing entries by task type.
- Decide what is billable. Mark time billable only when it qualifies under the agreement. Keep breaks and general administration separate unless the client’s terms make them billable.
- Convert minutes to decimal hours. Divide minutes by 60, then add the result to the whole hours. For example, 1 hour 30 minutes becomes 1.5 hours—not 1.30.
- Apply the agreed rounding method. Use the increment and method specified in the agreement, and apply them consistently. Rounding each entry can produce a different total from rounding an accumulated daily or billing-period total.
- Multiply by the applicable rate. Use the rate agreed for that task, role, or rate group. Multiply the billable hours by that rate to get each line amount.
- Add and review. Sum the line amounts for the pre-tax subtotal. Check the entries, descriptions, scope, rates, and arithmetic before sending the invoice; apply taxes, expenses, discounts, or other adjustments as applicable to the terms and rules that govern the work.
Example: 1.5 eligible billable hours × $100 per hour = $150 before taxes, discounts, expenses, or other adjustments. This is an arithmetic illustration, not a typical rate or industry benchmark.
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Choose a rounding rule and preserve precision
There is no universal rounding increment established by the sources cited here. Follow the client agreement and applicable professional obligations, disclose the method, and use it consistently. Stripe describes increments such as 5, 10, or 15 minutes as examples, not universal requirements. Stripe’s invoicing guidance emphasizes fairness and transparency; Everhour’s calculation guide says to apply rounding at the level specified by the agreement.
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For clarity, Billable’s hourly invoice template guidance puts the rule this way: “Pick one increment, put it in the contract, and use it on every line.”
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Do not round away precision before calculating the charge unless that is the agreed method. Beeline Professional documents retaining full time precision for rate multiplication and displaying monetary amounts to two decimal places. Its example converts 8 hours 25 minutes to 8.41667 hours; this is vendor documentation, not a general legal or accounting requirement. Beeline Professional documentation
Billable-hours template
Use this structure in a spreadsheet or document. Keep the original time record and calculated billable time distinct when your rounding policy changes the amount used for billing.
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| Field | What to enter |
|---|---|
| Business or contractor | Your name or business name |
| Client and project | Client name and project or engagement |
| Billing period | Dates covered by this invoice or timesheet |
| Invoice or reference number | A unique invoice or record identifier, if used |
| Date and task | When the work occurred and a clear description of the task |
| Start/end time or duration | Recorded time; include break duration where relevant |
| Recorded hours | Duration expressed as decimal hours |
| Billable status | Whether the time qualifies under the agreement |
| Billable hours used | Hours after applying the agreed billing and rounding method |
| Hourly rate | The agreed rate applicable to this task or role |
| Line amount | Billable hours multiplied by the applicable rate |
| Totals and status | Totals by client, project, and period; review or invoiced status to prevent duplicate billing |
| Tax or expenses | Add only when relevant to the engagement and invoice |
A ShiftFlow project and contractor timesheet template documents client- and project-level details, task entries, billable hours, rates, and automatic line amounts, with Excel, Word, and PDF examples. Check formulas, overtime treatment, pay rates, and totals before relying on a completed sheet for payroll, billing, or compliance records.
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Group entries so the client can connect the work performed to the time and charge. Use specific descriptions rather than vague labels, and show hours, the applicable rate, and the line total. Stripe recommends this level of detail and suggests summarizing total hours and amount due; attach a detailed timesheet when the contract or the client’s finance process calls for one. Stripe invoicing guidance
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Choose a tool that fits your workflow
| Option | Useful when | What to compare |
|---|---|---|
| Spreadsheet or document template | You need an editable record or prepare invoices manually. | Formula transparency, fields, file format, rounding flexibility, and review process. ShiftFlow documents Excel, Word, and PDF examples. |
| Time-tracking app | You want to record time during work and organize it by task or client. | Timer and manual entry, billable flags, reporting, export, and workflow fit. Stripe names Toggl, Harvest, and Clockify as examples; current pricing and terms are not established here. |
| Invoice generator | You already have time records and need a client-facing invoice. | Hours-and-rate detail, calculation behavior, output format, import and export, and data handling. Billable describes PDF output, saved invoices, CSV import, and JSON export in its hourly invoice template guidance. |
For the tools described above, see Stripe’s overview, Billable’s hourly invoice template guidance, and ShiftFlow’s template page.
Common calculation mistakes to avoid
- Entering minutes as decimal digits: 1 hour 30 minutes is 1.5 hours, not 1.30.
- Billing all recorded time: recorded time is not automatically billable; check the agreement and keep non-billable entries distinct.
- Changing rounding methods: inconsistent or undisclosed rounding can change charges and make them harder to verify.
- Applying the wrong rate: verify the agreed rate for each task or role before calculating the line amount.
- Using vague descriptions or hiding the math: show what was done, the hours, rate, and resulting amount.
- Skipping reconciliation: review entries, subtotals, and invoice totals, and mark invoiced records so they are not billed again.
Scope and local requirements
This is practical billing guidance, not legal, tax, payroll, or jurisdiction-specific advice. Rounding, timekeeping, tax treatment, and record retention may depend on the contract, professional rules, and location. Stripe also describes its guidance as general information rather than legal or tax advice.
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