Sales tax setups
Taxes are automatically calculated by the system for sales orders and purchase orders after you perform many setups.
Company records
Use SA Company Setup to set up default tax information for the company. Based on your tax method, the appropriate tax setup or maintenance fields are displayed when you access Customer Setup-Taxing, Vendor Setup-Taxing, Vendor Invoice Center Entry, Product Line Setup-Tax, Product Warehouse Description Setup-Taxing, or Sales Order Entry-Review Taxes and Totals.
General Ledger accounts
Use GL Account Setup to set up accounts you will use to post taxes paid and collected. This ensures accurate financial reporting. Other functions also require the account codes as part of their set up and operation.
Sales Order Entry addons
Use SA Order Entry Addon Setup to set up order entry addon codes related to taxes.
Nontaxable reasons
Use SA Table Code Value Setup-Non Taxable Reason to set up reasons for nontaxable sales.
Tax master records
Use SA Sales Use Taxes Setup to set up a tax master record for each state in the United States in which your company has nexus. Use SA Goods and Services Taxes Setup to set up a tax master record for each Canadian province in which you conduct business and collect tax. Use SA Value Added Taxes Setup to setup a tax master record for a country that collects VAT, such as the United Kingdom or Mexico. Use SA Sales Use Taxes Setup-Addons to assign addons, such as COD or freight, to a state jurisdiction. If your state uses variable taxing for addons, you must set up variable taxes for addons. Each addon description must have been previously set up in SA Order Entry Addon Setup.
Customer, vendor, and product records
Customer Setup: Each new customer record must have accurate taxing information to determine whether taxes are calculated during order entry and invoicing. If taxing information is displayed on a customer’s shipto record, that information overrides the information on this record. You can also override the taxing defaults when you enter an order in Sales Order Entry.
Customer Ship To Setup: When you set up a shipto record for a customer, the tax field values come from the Customer Setup record. If the shipto record is to be taxed in a different manner than the Customer Setup record, you must change the tax information accordingly. The provincial tax rates and rules vary according to the location in which the order originates and the location the merchandise is shipped to. You can change the taxing information when you enter orders, if the tax defaults are incorrect.
Vendor Setup: You must identify tax information for each vendor. This information defaults to purchase orders created for the vendor.
Vendor Invoice Center Entry: When you enter invoices for a Canadian vendor, you will be prompted to specify applicable tax amounts for Goods and Services Tax (GST) and Provincial Sales Tax (PST). These amounts are included in the total invoice amount.
Product Warehouse Description Setup: Because a Counter Sales (CS) or will call transaction occurs at a warehouse and the customer takes possession of the merchandise, the tax information for the order must relate to the warehouse record. The taxing state or province on the Customer Setup or Customer ShipTo Setup record are compared by the system with the taxing state or province on the warehouse record. If the taxing provinces are the same, the taxes are calculated by the system according to the Customer Setup or Customer ShipTo Setup record. If the taxing state or province on the customer’s record is not the same as the warehouse record, taxes are calculated according to the Product Warehouse Description Setup record.
Product Line Setup: You can set up tax defaults on the Tax view that relate to a product line. This information defaults to new products you set up in the Product Warehouse Product Setup function. This feature can save you time when you add new products from the same vendor product line.
Product Warehouse Product Setup: You must identify the tax status of each new product you set up in the warehouse. In general, the provincial and federal taxes, Goods and Services Tax (GST), apply to most products. The information on Customer Setup or Customer ShipTo Setup-Taxing determines whether tax on a product is charged to and collected from a customer.
Sales Order Entry: Product and customer tax information defaults to orders you enter for the customer. If you have sufficient security, you can change tax information on the order. Any changes you make only affect the current order. If the order specifies a shipto location, the taxing information defaults from the Customer Setup or Customer Ship To Setup record. You can also override tax information at the line level by accessing the Extended view. When you enter a product on the order, the tax information defaults from the Product Warehouse Product Setup record. This determines what taxes apply to the product when the product is sold. The Taxable field determines whether taxes are calculated for the specific line.
System hierarchy
When a sales order is entered in Sales Order Entry, a number of setup files are checked by the system to determine the taxability of the order. The taxability of an order or line depends on many factors. First, whether the company is taxed in the United States or Canada is determined by the system. Then, whether the customer is defined as taxable in Customer Setup or Customer Ship To Setup is determined by the system. If the customer is not taxable, the taxable status of the product is checked in Product Warehouse Product Setup. If either the customer or product is nontaxable, taxes are not calculated.
If the order or line is taxable, the Origin/Destination option in SA Sales Use Taxes Setup is checked by the system. This option determines whether the tax rates at the site of origin, the shipping warehouse, or the site of destination, the ship to, are to be used. For regular taxable orders, the Origin/Destination option in the SA Sales Use Taxes Setup record, defined in Product Warehouse Description Setup is checked by the system. If this option is Origin, the tax rates in the shipping warehouse’s SA Sales Use Taxes Setup record apply. If this option is Destination, the tax rates for the customer’s ship to record are used. For orders shipped out of state, the destination’s rates are always used.
The origin or destination status is determined by each state, unless the order is a Will Call or Counter Sale (CS). For example, the State of Colorado is strictly a destination state. Any orders shipped inside or outside of the state are assessed the tax rates for the destination, or ship to, unless the order is a CS or Will Call order. Contact your state taxing authorities to determine whether the states in which you do business that are liable for sales or usage taxes are destination or origin states.
The tax rates for the warehouse record are automatically used for Will Call or CS orders. If other tax rates must be applied for these order types, override the tax rates and amounts during Sales Order Entry if you have security to select the Tax Override option.
For Canadian taxes, the sales transaction for Counter Sales (CS) and orders with a Will Call disposition occur at the warehouse when the customer receives the merchandise, so the tax information for the order must relate to the warehouse record. The taxing province on the Customer Setup or Customer ShipTo Setup record is compared by the system with the taxing province on the warehouse record.
- If the taxing provinces are the same, the taxes are calculated according to the Customer Setup or Customer ShipTo Setup record.
- If the taxing province on the customer’s record are not the same as the warehouse record, taxes are calculated according to the Product Warehouse Description Setup record.
Canadian tax master records are set up in SA Goods and Services Taxes Setup and SA Local Taxes Setup.