How are sales taxes calculated?
Best Farrier calculates sales taxes on a line item basis.
Each item on an invoice is checked against all the sales taxes that apply to the invoice (whether that line item is a service or product, and if each sales tax applies to it). If applicable, the tax amounts for that line item are calculated and stored.
The total sales taxes for the invoice is the sum of all the sales taxes for all the line items.
What if I need some items in an invoice to be tax-exempt?
Right now, we suggest you create two separate invoices: one for all the items that are charged sales taxes, and one for the tax-exempt ones (by removing the sales taxes when creating the second invoice). You can have multiple default sales taxes.
The sales taxes list
This page lists all the sales taxes rules you defined.
The top bar allows you to:
- Go back to the Settings page
- Filter the list and show only “active“ or “inactive” sales taxes
- Add a new sales tax ()
Each sales tax entry shows a description, tax rate and whether it applies to services, products or both. The letters on the icon to the left are the first 2 letters of the tax description.
Sales taxes marked with a are default taxes, and are automatically applied to any new invoice (you can still change this while creating the invoice). You can have multiple default sales taxes.
Adding or editing sales taxes
You can add a new sales tax by tapping on the sales taxes list top bar. To edit an existing sales tax, tap on it.
When entering or editing a sales tax, you can specify if the tax will apply to services, products or both, using the appropriate checkboxes.
If you check the default sales tax box, this tax will be added automatically to any new invoice you create.
The active checkbox indicate whether this is an active sales tax or not. See “deleting a sales tax“, below.
Important notice when editing sales taxes
When editing a sales tax, you may see this warning at the top of the screen:
This means this sales tax has been used while creating invoices. If you change anything other than its description, it will change the way it is charged from then on, which may cause inconsistencies between the sales tax reports and the actual amount you collected as sales taxes.
Be sure you know what you’re doing before changing the rate, or whether the tax applies to services and/or products!
A better alternative to modifying an existing sales tax is to mark the incorrect/outdated sales tax as “inactive“, and then creating a new, correct sales tax and start using that one instead. This way, any old invoices that used the original sales tax will still be reported correctly in the sales tax reports, with the correct amounts.
Deleting a sales tax
To delete a sales tax, tap on the entry on the sales taxes list to edit it, then tap on the top bar.
If the icon is not present, that means the sales tax was already included in an invoice. It cannot be deleted anymore, but it can be marked as “inactive” to prevent it from being used in new invoices from now on.
To mark a sales tax as “inactive”, just edit it and uncheck its “active” box.