Three setup methods will be described in this article.
- Entire state has the same tax rate
- Multiple Taxing Jurisdictions – setup one Sales Tax Record
- Multiple Taxing Jurisdictions – setup multiple Sales Tax Records
Entire State Same Tax Rate
From the main menu, arrive at the Sales Tax setup with this path: Setup > Accounting > Sales Tax.
The Sales Tax list will be displayed. Setting up a new Sales Tax record is a two-step process. First, create the Sales Tax record, and then setup the tax rate.
Click on the Add Sales Tax button at the upper left of the page.
The Sales Tax Edit form will be displayed. Each data entry field will be described below.
Data entry fields preceded with an asterisk are required.
- *Sales Tax Code – Enter a code, maximum of 25 characters.
- *Name – Enter a description, maximum of 50 characters.
- Recurring – If recurring type services are possibly taxable in this jurisdiction, set the toggle to Yes.
Note: Individual Items and Parts may be flagged as taxable or non-taxable.
- Non-Recurring – If non-recurring type services are possibly taxable in this jurisdiction, set the toggle to Yes.
- Base – Set to No. This is only used if you are linking several Sales Tax records together for a combined rate.
- Breakout – Set to No. This is only set to Yes if you are linking several Sales Tax records together for a combined rate, and you want to print the amount of tax for each Sales Tax record separately on the customer invoice.
- *GL Account – From the drop-down list, select the GL Account to be used as the sales tax liability account.
When finished, click the save button at the bottom of the form.
You will be returned to the Sales Tax list. Locate the Sales Tax record just created, and then click the Rates button.
The Rates list will be displayed for the select Sales Tax record. Click on the Add Sales Tax Rate button at the upper left.
The Sales Tax Rate Edit form will be displayed.
In the Tax Rate field, enter the tax rate. In the Start Date field, enter the date this tax rate went into effect. Click the Save button when finished.
You will be returned to the Rates list. You should see the tax rate appear for your Sales Tax record. Click the Back button at the upper right to return to the Sales Tax listing.
You will be returned to the Sales Tax list. You should see the tax rate appear for your Sales Tax record.
Multiple Taxing Jurisdictions – One Sales Tax Record
The process for setting up a single Sales Tax record where multiple taxing jurisdictions are involved, is the same process as described under the topic “Entire State Same Tax Rate”.
When entering the Tax Rate, you would need to know the combined rate for all jurisdictions.
If any of the rates for any of the jurisdictions changes, you would need to enter a new Tax Rate for the combined amount.
Multiple Taxing Jurisdictions – Multiple Sales Tax Records
Where multiple taxing jurisdictions are involved, this method takes more time to setup, however is easier to maintain when rates change in the future. If your company does business in multiple cities within the same state, if the state tax rate changes, you only need to make the change in one Sales Tax record.
Below is a visualization of how multiple taxing jurisdictions are setup.
Setup the “Base” Sales Tax Records
For each taxing jurisdiction, create one Sales Tax Record. In our example as shown in the visualization on the previous page, we will create three Sales Tax records: one for the state, one for the county, and one for the city.
From the main menu, arrive at the Sales Tax setup with this path: Setup > Accounting > Sales Tax.
The Sales Tax list will be displayed. Setting up a new Sales Tax record is a two-step process. First, create the Sales Tax record, and then setup the tax rate.
Click on the Add Sales Tax button at the upper left of the page.
The Sales Tax Edit form will be displayed. Each data entry field will be described below.
Data entry fields preceded with an asterisk are required.
- *Sales Tax Code – Enter a code, maximum of 25 characters.
- *Name – Enter a description, maximum of 50 characters.
- Recurring – If recurring type services are possibly taxable in this jurisdiction, set the toggle to Yes.
Note: Individual Items and Parts may be flagged as taxable or non-taxable.
- Non-Recurring – If non-recurring type services are possibly taxable in this jurisdiction, set the toggle to Yes.
- Base – Set to No. This is only used if you are linking several Sales Tax records together for a combined rate.
- Breakout – Set to No. This is only set to Yes if you are linking several Sales Tax records together for a combined rate, and you want to print the amount of tax for each Sales Tax record separately on the customer invoice.
- *GL Account – From the drop-down list, select the GL Account to be used as the sales tax liability account.
When finished, click the Save button at the bottom of the form.
You will be returned to the Sales Tax list. Locate the Sales Tax record just created, and then click the Rates button.
The Rates list will be displayed for the selected Sales Tax record. Click on the Add Sales Tax Rate button at the upper left.
The Sales Tax Rate Edit form will be displayed.
In the Tax Rate field, enter the tax rate. In the Start Date field, enter the date this tax rate went into effect. Click the Save button when finished.
You will be returned to the Rates list. You should see the tax rate appear for your Sales Tax record. Click the Back button at the upper right to return to the Sales Tax listing.
You will be returned to the Sales Tax list. You should see the tax rate appear for your Sales Tax record.
Follow the same process to create a Sales Tax record for the other taxing jurisdictions. In our example, we have Sales Tax records for CA-State, CA-Orange Co, and CA-Tustin City. If setup correctly, you should not see the Link button on these records.
Setup the Sales Tax Record to be Linked to the “Base” Sales Tax Records
For each area that has multiple taxing jurisdictions, you will create one Sales Tax record and then link to all the pertinent Sales Tax records. The name for the Sales Tax record would be the lowest level taxing jurisdiction, typically the city.
When we setup our “Base” Sales Tax records, we setup the following: CA-State, CA-Orange Co, and CA-Tustin City. We need to create a new Sales Tax record that will be used to assign to our site records for the city of Tustin in California. We cannot use the same Sales Tax code again, so we will setup this new record as CA.
From the main menu, arrive at the Sales Tax setup with this path: Setup > Accounting > Sales Tax.
The Sales Tax list will be displayed. Click on the Add Sales Tax button at the upper left of the page.
The Sales Tax Edit form will be displayed. Each data entry field will be described below.
Data entry fields preceded with an asterisk are required.
- *Sales Tax Code – Enter a code, maximum of 25 characters.
- *Name – Enter a description, maximum of 50 characters.
- Recurring – If recurring type services are possibly taxable in this jurisdiction, set the toggle to Yes.
Note: Individual Items and Parts may be flagged as taxable or non-taxable.
- Non-Recurring – If non-recurring type services are possibly taxable in this jurisdiction, set the toggle to Yes.
- Base – Set to No. This is only used if you are linking several Sales Tax records together for a combined rate.
- Breakout – Set to No. This is only set to Yes if you are linking several Sales Tax records together for a combined rate, and you want to print the amount of tax for each Sales Tax record separately on the customer invoice.
*GL Account – From the drop-down list, select the GL Account to be used as the sales tax liability account.
When finished, click the Save button at the bottom of the form.
You will be returned to the Sales Tax list. Locate the Sales Tax record just created, and then click the Link button.
The Link Base Sales Tax form will be displayed. Click in the white box, which will provide a list of Sales Tax records. Click on the first Sales Tax record to link.
Click in the white box again, and select the next Sales Tax record to link. Repeat the process until all Sales Tax records needed are linked, and then click the Save button at the bottom of the form.
You will be returned to the Sales Tax list. Locate the Sales Tax record on which you performed the link, and in the Rate column, you should see the combined tax rate of all the Sales Tax records that were linked.
