You can configure your system to collect, record, and report Sales Tax. There are two tax solution options within SalesOrder:
1. Using 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 Using Tax Jar automation.
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2. Manual Intervention – Manually setup tax authorities, tax codes, and groups for preset on Customer and Supplier masters, transactions, and reports.
How the system models 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:
- Create Tax Authority.
- Create Tax Codes.
- 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.
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.