Setup Sales Tax

You can configure your system to apply, record, and report USA Sales Taxes. You can configure Tax Authorities, with their commensurate rates of Taxes in your system.

You have two methods to track and report Sales Tax:

Manually preset Tax rates with Tax codes: A Tax code represents an individual Tax rate, for example, State Tax. Tax codes can be combined in Tax groups, for example, State and City Tax rates.

Using this method, Tax codes and Tax groups can be applied to transactions to calculate and record the appropriate tax collected. You can generate a Sales Tax Liability report. This report presents Tax amounts collected by Tax Authority.

Tax Automation: Tax Automation is a third party addon from TaxJar. TaxJar automatically tracks Tax rates to:

  • Determine the application of taxes based upon the Shipping Address.
  • Produce and files Tax Liability reports.

The TaxJar solution takes minutes to set up and significantly lowers the amount of effort and care required to ensure your Tax position is accurate.

You can preset whether or not a specific Item (e.g. SKU) is taxable. This is specified on the Sales Tab of the commensurate Item master using the Item Tax option. You can create Item Tax options to model and report tax at Item level e.g. Baby Clothes.

Adding Avalara is on our Engineering roadmap. Contact support@salesorder.com for more details.

How the system models Tax (no automation)

Using Sales Tax

The Tax function under Accounting consists of –

Tax Authorities – Using Tax Authority masters you can track balances of tax owed and the related transactions.

Tax Codes – You can create tax codes, assign tax rates and effective dates.

Tax Groups – They consist of tax codes which belong to Tax Authorities. The order of creating a Tax group is:

  1. Create Tax Authority.
  2. Create Tax Codes.
  3. Create Tax Groups.

Item Tax Options – They are used to define whether 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.

Create Tax Authority

You can create a Tax Authority ‘Master’ and track the balance owed and the related transactions on the master

To create a Tax Authority Master, go to:

ACCOUNTING > Tax > Tax Authority > +

You can set default Liability ‘sub-ledger’ accounts for each Authority through the ‘Liability Account (Sales)’ field on the Tax Authority master.

Create Tax Code

To create a Tax Code, go to:

ACCOUNTING > Tax > Tax Code > +

Select the Tax Authority and set the rate and effective date.

Create Tax Group

To create a Tax Group, go to:

ACCOUNTING > Tax > Tax Group > +

Select the appropriate Tax Codes for the Tax Group.

Create Item Tax Options

To create a Item Tax Options, go to:

ACCOUNTING > Tax > Item Tax Options > +

Name the option.

If the option is taxable, check the ‘Is taxable‘ checkbox.

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.

To assign a default Item Tax Option to an Item, go to:

PRODUCTS/SERVICES > Items > Select an Item > View Item Screen >  Sales/Prices tab > Pricing Details section

Set ‘Item Tax‘ value from drop down field.

Preset Tax on Customers and Suppliers

Document can inherit preset Tax settings from their parent Customer or Supplier master.

To preset Tax on Customers, go to:

SALES > Customers > Select a Customer > View Customer Screen > Edit > Profile tab > go to Trading Information section > Set ‘Tax Code/Group‘.

To preset Tax on Suppliers, go to:

PURCHASING > Suppliers > Select a Supplier > View Supplier Screen > Edit > Profile tab > go to Trading Information section > Set ‘Tax Code/Group‘.

Change Tax Code/Group on Documents

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 drop down.

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

To access the Sales Tax Liability report, go to:

REPORTS > Standard Reports > US Tax section> Sales Tax Liability

The report can be exported to Excel(.xlsx) format for manipulation.

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