Setting Up Sales Tax Codes

AccountsReceivableGuide > Accounts Receivable > Setting Up Accounts Receivable > Accounts Receivable Codes > Setting Up Sales Tax Codes

Creating Sales Tax Codes

Sales Tax Codes allow you to set up a tax calculation formula that quickly and accurately calculates the correct sales tax on each sale. If the system should treat sales tax on a transaction differently, the clerk can override the code (depending on the setup) so that the correct tax is calculated.

You can set up your Sales Tax Codes to calculate the correct sales tax for multiple taxing authorities (i.e., state and municipal sales tax). Depending on your integration settings, you can set up the code(s) so that the tax collected is properly distributed to the Accounts Payable vendor or general ledger liability accounts.

NOTE: Changes made to any existing Sales Tax Codes can affect saved but unposted invoices. However, this occurs only if you open the invoice, click in the grid, and save the invoice again.

Example: How can I benefit from using Sales Tax Codes?
A local resort collects a 6% room tax for the state and another 3% tax on rooms for the municipal government. On food and beverage, the resort’s restaurants and lounges collect 4% for the state and 2% for the municipal government. The resort’s recreational outlets collect 6% sales tax for the state and 2% for the municipal government. In addition, the golf course and the stable collect 4% for the county for use of county land. The following Sales Tax Codes were established to deal with these different tax requirements: ROOMTX = 9.0% (6% State Room Tax plus 3.0% Municipal Room Tax) FDNBEV = 6.0% (4% State Food and Beverage Tax plus 2.0% Municipal Food and Beverage Tax) RECRE8 = 8.0% (6% State Recreation Tax plus 2.0% Municipal Recreation Tax) GOLFTX = 6.0% (2.0% Municipal Golf and Stables Tax plus 4.0% County Golf and Stables Tax) At the hotel desk, the clerks use the Sales Tax Code ROOMTX, and both the state and municipal room taxes are automatically calculated.

Example: How can I benefit from using Sales Tax Codes?

A local resort collects a 6% room tax for the state and another 3% tax on rooms for the municipal government.

On food and beverage, the resort’s restaurants and lounges collect 4% for the state and 2% for the municipal government.

The resort’s recreational outlets collect 6% sales tax for the state and 2% for the municipal government.

In addition, the golf course and the stable collect 4% for the county for use of county land.

The following Sales Tax Codes were established to deal with these different tax requirements:

ROOMTX = 9.0% (6% State Room Tax plus 3.0% Municipal Room Tax)
FDNBEV = 6.0% (4% State Food and Beverage Tax plus 2.0% Municipal Food and Beverage Tax)
RECRE8 = 8.0% (6% State Recreation Tax plus 2.0% Municipal Recreation Tax)
GOLFTX = 6.0% (2.0% Municipal Golf and Stables Tax plus 4.0% County Golf and Stables Tax)

At the hotel desk, the clerks use the Sales Tax Code ROOMTX, and both the state and municipal room taxes are automatically calculated.

Published date: 12/31/2020