About Taxes

[Dieter S. <dsi...@sq...>]

A brief overview how to set it all up and how it works.

1. Add an account in the chart of accounts.

2. check the box "Tax" if you want
   Receivables -> a field to enter an amount in the receivables form
   Payables -> a field to enter an amount in the payables form
   Parts Inventory -> a checkbox with the description in the parts form to
indicate that this part is taxable
   Service Item -> a checkbox with the description in the service
item form to indicate that the service is taxable

3. check "Yes" next to "Include this account on ..." if the account should
be included on the customer / vendor forms to indicate that the customer /
vendor is taxable at this level

Repeat above for each tax you have. i.e if you have VAT @ 10, 14 and 30%
add an account for each tax.

4. edit your preferences and enter a tax rate and tax number


On an invoice the tax can either be included in the price or shown
separately. If tax is included in the price the tax portion is not shown
on the invoice. Taxes are only calculated if the customer/vendor is
taxable at the same rate as the item. So, if a customer is taxable at VAT
@ 10% and the item is set taxable at VAT @ 30% no taxes will be
calculated. You must also indicate that the customer is taxable at VAT @
30%.

Taxes are calculated differently if included in price or shown on top.
i.e.  $100 item, taxable at 7%
 tax included -> net price is 93.46, tax portion is 6.54
 tax on top -> net price is 100.00, tax is 7.00

multiple taxes are always additive and not calculated tax on tax.
So, the same $100 item at 7% and 8%
 tax included -> net price is 86.96, tax is 13.04
 tax on top -> net price is 100.00, tax is 15.00


Dieter Simader    http://www.sql-ledger.org   (780) 472-8161
DWS Systems Inc.     Accounting Software       Fax: 478-5281
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