1. Access the Item Category application from the Lists menu and setup the sales tax categories.
2. Access the Items application from the Lists Menu and assign an Item Category and check Taxable in the Item - Setup Tab for items subject to sales tax.
3. Access the Sales Taxes application from the Lists menu. Enter individual sales tax Id, rates, item categories and calculation methods; assign each tax to a taxing entity for payment; and specify general ledger account information for tracking taxes paid and collected
4. Access the Sales Tax Groups application from the Lists menu and setup groups of taxes that should be applied to individual customers or vendors.
5. Access the Customers application from the Lists menu and setup sales tax defaults for the customer and its addresses.
Customer document default Sales Tax logic is as follows:
| • | The default Sales Tax for the document shipping address will be the default for the document. |
| • | If there is no default Sales Tax for the shipping address, the default Sales Tax for the billing address will default for the document. |
| • | If there is no default Sales Tax for the billing address, the customer default Sales Tax will default for the document. |
You can establish a default Sales Tax for each customer and the default Sales Tax will automatically default in Invoice/Credit Memo, Estimate and Sales Order and Cash Sale for the customer's documents that are assigned to the customer.
6. Access the Vendors application from the Lists menu and setup sales tax defaults for the vendor and its addresses.
Vendor document default Sales Tax logic is as follows:
| • | The default Sales Tax for the document remit address will be the default for the document. |
| • | If there is no default Sales Tax for the remit address, the default Sales Tax for the purchase from address will default for the document. |
| • | If there is no default Sales Tax for the purchase from address, the vendor default Sales Tax will default for the document. |
You can establish a default Sales Tax for each vendor address and the default Sales Tax will automatically default in Bill , Item Receipt and Purchase Order for the vendor documents that are assigned this address.
7. Sales taxes are calculated for each taxable line item on a document, if the tax is applicable to the item category associated with the taxable item. The calculated tax amounts can be modified by right clicking on a transaction and selecting the Tax Entry option.
Sale Tax Calculation Logic
Line Item Tax Entry is available for transaction lines checked as Taxable. Taxable will default to checked for transactions assigned an item that is marked as Taxable in Items.
If there is a Default Tax on the document (see above for Default Tax default logic), when the Line Item Tax Entry screen is accessed, the tax or taxes associated with the Default Tax that are applicable to the item will be displayed with the calculated tax amount.
A tax is applicable if (1) the transaction item's item category is applicable to the tax and (2) the effective date of the tax is applicable based on the document date.
8. The Tax Entry window will display and allow entry of additional taxes, modification to the tax amount and the deletion of unnecessary taxes.
