If automatic tax calculation is enabled, taxes can be calculated automatically when the Global Admin (GA) user sends or processes a statement. Taxes are collected from all companies unless they are marked exempted, in which case no taxes are collected. Taxes are a percentage of those item types that are marked as taxable.
To set up the system to calculate taxes:
- Financials > Settings > Financial Set-up
- Scroll down to the ‘New Item’ tab and fill out the required fields.
- Item Name: Tax
- Item Price: Enter the appropriate tax items
- Item Type: Choose ‘Tax’ from the drop-down menu
Go back to the Settings Tab > Item Types
- Click on the check box for what items are ‘Taxable’
*Give your Tax items priorities, for multi-level tax scenarios.
Example: We have the Sales Tax at Priority 1 for 6% and VAT at Priority 2 for 1%. The Sales Tax calculates first to show $66 ($1100x6%) in tax, next the VAT calculates based on the new total to give us $11.66 ($1166x1%) for a total of $1177.66 due.
When you send or process statements, the taxes are calculated and included automatically.
How do I mark a company tax exempt?
A Custom Company Field called "Tax Exempted" will have to be added first.
That field will appear in the ‘Company Info’ tab under ‘Company Custom Fields’. Mark the field 'true'.
What if the tax rate changes?
If the tax rate changes, the Global Admin user will update the Rate Card item(s) in Financials > Settings > Financial Setup. Any change will create a new order in the Company Order Tab. Any statement processed after the change will apply the new rate to the amount being invoiced.