What is the proper way to draw up an invoice for a banquet? Am I supposed to be applying sales tax after the service charge is applied or only on the subtotal? I have read that some banquet facilities are charging tax on top of the service charge. i.e. Taxable Service Charge... My current employer is applying sales tax to the subtotal and then applying 18% service charge on top of that total, which I think is wrong. I am in charge of running banquets now for my employer and would like to charge the client the correct amount but obviously would like to charge as little as possible for the tax rate and as much as possible for the service charge, only if it's legal though. Obviously, the way my employer does it now is the best way in that regard but I don't think that is the correct way as far as the tax man is concerned. This is how I am thinking is the correct way... For example: $1000 in food X 18% Service Charge = $180 = $1180 $1180 X 7.85% Local Tax = $92.63 =$1272.63 This is how my current employer is charging the same event, which I think is incorrect... $1000 in food X 7.85% Local Tax = $78.50 =$1078.50 X 18% Service Charge = $194.13 = $1272.63 Or, are both these wrong and you only apply the percentages to original total? That's how I used to always think it worked but then I saw how my employer was doing it and I saw that other companies were stating that they charge "taxable service charges". That's where the confusion is.