Sales Tax
For General Ledgers with a USD or CAD base currency
You can configure your system to collect, record, and report Sales Tax. From the Tax Authority masters, you can track the balances of tax owed and the related transactions.
There are two tax solution options:
  1. 1.
    Automation - Automatically determine the application of taxes, produce, and file reports. This solution takes minutes to set up and significantly lowers the amount of effort and care required to ensure your Tax position is accurate. See ‘Taxjar’.
  2. 2.
    Manual Intervention - Manually setup tax authorities, tax codes, and groups for preset on Customer and Supplier masters, transactions, and reports. See below.

How the system models Tax

Tax Groups consist of Tax Codes which ‘belong’ to Tax Authorities. The order of creating a Tax group is:
  1. 1.
    Create Authority
  2. 2.
    Create Tax Codes
  3. 3.
    Create Tax Groups
You can pay or receive payment from a Tax Authority. Tax codes are assigned to Tax Authorities.
Tax Codes specify the percentage of tax applied to the sub total of a transaction. Tax codes can be applied at the whole transaction or Line Item level. The resulting balance of the tax calculation is posted to the corresponing Liability account.
Tax Groups specify a group of Tax Codes. The sum of the percentages for a group of Tax Codes is applied to the whole transaction or Line Item.

Item Tax Options

Item Tax Options determine and indicate if a Line Item is Taxable (or not). You can assign a default Item Tax Option to an Item. When the Item is used in a Document this setting will override the Document preset Tax treatment.

Add a Tax Authority

You can create a Tax Authority ‘master’. You can track the balance owed and the related transactions on the master.
Accounting>Tax>Tax Authority>+
You can set default Liability ‘sub-ledger’ accounts for each authority in the ‘Liability Account (Sales)’ field on the Tax authority master.

Create a Tax Code

Accounting>Tax>Tax Code>+
Select the authority. And set the name, rate and effective date.

Create Tax Group

Accounting>Tax>Tax Group>+
Select the Tax codes.

Create Item Tax Option

Accounting>Tax>Item Tax Option
Name the option, if appropriate, set to taxable.

Setup Item Tax Option as a default on Item

Item Tax Options determine and indicate if a Line Item is Taxable (or not). You can assign a default Item Tax Option to an Item. When the Item is used in a Document this setting will override the Document preset Tax treatment.
Item>Sales/Prices>Pricing Details>Item Tax

Preset Tax on Customers and Suppliers

The Document can inherit preset Tax settings from their parent Customer or Supplier master.
Customer/Supplier>Profile tab>Trading Information>Tax code/Group

Change Tax Code or Group on Documents

Whilst Documents inherit their Tax setting from their parent Customer or Supplier, you can override the Tax settings by editing the Document and selecting a new value from the Tax Code/Group dropdown. You need to do this before you add Line Items to the Document, as changing this setting will not automatically affect any Items already present on the table.

Tax Reports

The Sales Tax Liability report is here:
Reports>Standard reports>US Tax>Sales Tax Liability
The report can be exported to .xlsx format for manipulation.
Last modified 3mo ago