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Working with US Sales Tax |
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Topic: Accounting If you are trading from the United States of America and your base currency is USD, salesorder.com automatically incorporates USA Sales Tax functionality, rather than, for example, the UK VAT Tax system, which is included if you choose currency GBP.
Overview Understanding how Sales Tax works in salesorder.com requires that you know about certain key documents specifically relating to tax, namely Tax Authorities, Tax Codes, Tax Groups and Item Tax Options. These documents and their interrelationships are explained below.
Tax Authorities Tax Authorities (sometimes called Tax Agencies) correspond to the State departments that set tax rates and collect your tax payments. You should create a Tax Authority document for each distinct authority to which you pay sales tax.
Tax Codes Tax Codes represent names and associated rates of tax set by specific Tax Authorities. For this reason Tax Codes are associated with their related Tax Authority via a drop-down list.
NOTE: You can assign a default Tax Code to a Customer so that when an associated Sales Document is created (such as a Sales Invoice), it will automatically be assigned the default Tax Code.
Tax Groups Tax Groups, as the name suggests, group together a set of related Tax Codes and present a single rate which is the sum of the constituent Tax Code rates. Tax Groups are used when you need to apply multiple Tax Rates to your Sales Line Items.
NOTE: You can assign a default Tax Group to a Customer so that when an associated Sales Document is created (such as a Sales Invoice), it will automatically be assigned the default Tax Group.
Item Tax Options These are flags indicating if a particular Line Item, on say a Sales Invoice, is taxable or not. By default salesorder.com has a single ITO which is called Taxable. You can specify as many ITO's as you wish, each has a name together with a flag to determine if it is taxable or non taxable. For each Line Item on a Sales Document you can then select from the list of ITO's and determine if the item is taxed or not.
NOTE: You can assign a default Item Tax Option to an Item so that when an associated Line Item is placed on a Sales Document, it will automatically be assigned its default Item Tax Option.
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