When discussing gross vs. net prices, this could apply to one of any number of different elements of your business. From the payroll, to the company profits, to the pricing of your products.
In this article, gross and net refers to what you select for your invoices. In invoicing software like Debitoor, you can change whether your product prices are shown in gross or net prices for each invoice you create.
The gross price of a product or service
When a price is in gross pricing, this means that the price that you set for a product or service is reflected directly in your invoices. The gross cost includes all aspects of the purchase of raw materials, labour, etc. in the sale price.
In your invoice template, the gross price also means that the price listed already takes into consideration the applicable VAT rate. The invoice will still break down the VAT based on the rate you’ve applied and show the ‘Subtotal before VAT’ in the final lines of your invoice body.
The net price of a product or service
When net price is selected, this means that the price provided in the invoice is the total amount for the units before VAT has been added. It also means that it is the price before any deductions are made, such as CIS, for example.
In your invoice template, using the net price means that the price listed will have the VAT and any deductions applied after the subtotal.
Gross and Net in Debitoor invoicing software
When it comes to your invoicing, to adjust whether your invoices apply gross or net when it comes to the prices for your products or services, it takes only the click of your mouse.
Under the ‘Options’ section when creating a new invoice, you’ll see the first option that says ‘Choose whether to show prices with or without VAT’. Make sure your selection is in green.