The Subtotal Item is used on Sales Forms (Invoices, Sales Receipts and Estimates). It adds up all the line items above it, to the last Subtotal. Before using it, make sure that "Subtotal" is set up as an "Item" in your QuickBooks. When you go to create it as an "Item", Subtotal will be in the main pulldown under "Type". Click it, and then name it Subtotal under Item Name/Number. Then, proceed to reap the benefits!
Summarize: For instance, if your sales form includes different types of items such as products and services, group items of similar types together on the form, then add the Subtotal item under each group. This is a great way to summarize the charges for your customers.
Apply Discounts: Because QuickBooks calculates percentages only on the line above, you must subtotal the items before entering a Discount item that calculates on a percentage basis.
Apply different Sales Tax Rates: If you're a clothing retailer or interior designer in New York State, you'll certainly understand this dilemma: different items have different sales tax rates. Use the Subtotal Item for each group of items with similar sales tax rates. Just like with the Discount, the Sales Tax Item, when placed under the subtotal, will always apply the appropriate Sales Tax to the group of items above the Subtotal.
Invoicing in Phases: If you create Estimates and usually invoice in phases, divide your Estimate into sections by phase. Enter the Subtotal Item after the items for each phase. This makes it easier to invoice for one phase at a time.
Add up multiple Subtotals: If you use more than one Subtotal in a sales form, add an additional Subtotal Item which will add up all the previous Subtotals.
Example: The following picture is a great illustration on how the Subtotal Item can work on one invoice: