Configuring Tax Codes & Groups

Overview

This process document will outline how to set up Tax Codes, create Tax Codes Groups, and Tax Authorities.

It will also cover how the Savance Enterprise charges tax at an Account level and the settings to ensure proper taxes are being charged. Lastly, the document will go over Tax-Exempt Accounts as well as Tax Reports & Summaries.

Tax Hierarchy

Taxes are charged based on the shipping point. Tax codes can be assigned at different levels of an Account for different scenarios. The below diagram shows what tax code is used and where based on the scenario.

By default, Savance Enterprise preloads 2 default Tax Codes: M16 - Michigan Sales Tax and Non-Tax.

Tax Codes can be broken down to the City, State, and County(if applicable) Tax level. Alternatively, you can just have a single Tax Code that combines both City, and State Tax as one rate. (i.e. M16 - Michigan Sales Tax)

To create your own Tax Codes from the top menu select Admin > Administrator and select the ‘Tax Codes’ tab.

• Select ‘New’

• Type a Code i.e. Seattle

• Enter the Rate - 3.6%

• Tax Authority - n/a

• Tax State - WA

• Enter a description - Seattle City Tax Rate

• Select ‘Add’

• Now we will repeat the same steps to add the Washington State rate.

  • Select ‘New’

  • Type a Code i.e. Washington

  • Enter the Rate - 6.5%

  • Tax Authority - n/a

  • Tax State - WA

  • Enter a description - Washington State Tax Rate

  • Select ‘Add’

Alternatively, if you don’t wish to have a city and state breakdown in your tax summary report you could create one Tax Code for both the city of Seattle & Washington state.

• Select ‘New’

• Type a Code i.e. Seattle-WA

• Enter the Rate - 10.1%

• Tax Authority - n/a

• Tax State - WA

• Enter a description - Seattle, Washington Tax Rate

• Select ‘Add’

Creating a Tax Code Groups

If you prefer to have a breakdown of your taxes at the city, county, and state levels especially when reporting you’ll want to create a Tax Code Group.

To create your own Tax Code Group from the top menu select Admin > Administrator and select the ‘Tax Codes’ tab, then select the ‘Tax Code Groups’ inner tab.

• • Select ‘New Group’

  • Enter a Tax Code Group Name - i.e. WA-State

  • Enter a Tax Code Group Description - i.e. Seattle, Washington City & State Taxes

  • Select ‘Add Code’

  • From the drop-down select a Tax Code you want to be a part of this group i.e. Seattle

  • Select ‘Ok’ and it will appear below in the Tax Codes in Current Tax group Box

• To add another Code to this group

• Select ‘Add Code’

• From the drop-down select a Tax Code you want to be a part of this group i.e. Washington

• Select ‘Ok’ and it will appear below in the Tax Codes in Current Tax group Box

• Once you are complete select ‘Add Group’

• Your Tax Group Name will appear above and the details will appear below.

Updating Existing Tax Code %’s

There will eventually be a time where an increase or decrease happens with your tax code %’s. You’re able to always go back into the tax codes section of the admin and update the specific codes to reflect the new change in %.

Some things to note when updating a tax code %:

• When updating the % of a code that exists within a tax group, you do not have to update the tax group itself, you only have to update the specific codes %.

• Any existing orders that have this tax code being used either by itself or within its tax group, will not recalculate on existing orders. The only way for a new calculation to occur is if the code is re-selected on the summary tab. This will then recalculate the tax with the new %.

• Any new orders created will get the newly updated tax % going forward.

• It’s recommended that if you need to charge B/O items the new tax % then a separate order would need to be created to calculate accordingly.

Assigning Tax Codes

Accounts

When creating new accounts a default Tax Code must be assigned. This default, however, can be overridden if this account places a Will Call order or if this account has various Ship To’s locations where different tax codes are specified.

To manage your Account level tax code, go to Accounts > Manage Accounts and look for the account you wish to update.

• Once in the account go to the ‘Financial Terms’ tab.

• Under the Settings section find Tax Authority

• From the drop-down menu select the appropriate tax code*.

  • *Note both your individual tax codes and tax code groups will appear.

In this example, if I were to assign this Account the ‘Seattle’ Tax Code, that means this customer will only be charged the 3.6% Seattle city tax and NOT both Seattle and Washington. If I select the ‘WA-State’ code the customer will be charged both Seattle and Washington city & state tax.

• Once you’ve made your selection select ‘Save’ to update your changes.

Account ShipTo’s

Each Account can have multiple ShipTo’s and each can have their own Tax Code assigned to them. To add a tax code at a ship to level go to Accounts > Manage Accounts and look for the account you wish to add/edit a ShipTo.

• Once in the account go to the ‘Address Info’’ tab.

• Select ‘Add’

• Select ‘Ship To’ from the Address Type drop-down.

• As you can see below based on choosing the Ship-To as the address type fields will appear and disappear based on information that is required.

  

• Enter your address information

• The Tax Code field shows by default ‘Inherited’ (this means it is pulling the default Tax Code from your Account Level. To change this, select the new Tax Code from the drop-down menu.

  

• Select ‘Save’ when completed.

How Taxes Applied to Account ShipTo’s New Order/Quote

When you create a quote/sales order for an account you can choose a Ship To and collect the correct taxes.

• From here you can verify the correct Tax Code, but also override it and choose another one.

• If you do not have a ShipTo Tax Code assigned to this address the Account Level default tax code will apply.

Account ShipTo’s New Order/Quote Will Call

In Savance Enterprise your Warehouse(s) are also considered “Accounts” and a default Tax Code is also required.

To manage your Warehouse Account and select a default tax code, go to Accounts > Account Manager and search for your Warehouse Account.

Here you will follow the same steps in assigning a default Tax Code as in the above section Accounts.

When a customer is placing a Will Call order, taxes should be charged based on the pickup location i.e. your location/Warehouse. To ensure this is correct you will need to update your global settings within the Administrator settings. Go to Admin > Administrator and select the ‘Sites’ tab, then select the ‘Site Settings’ inner tab. Find the setting ‘ Use warehouses tax code in Will Call Orders for taxable customers’ and make sure it is set to ‘Yes’ and then save your changes.

Now when you go to place a Will Call order for your customer the Warehouse default Tax Code will apply instead of the Account level.

Tax-Exempt Customers

In the event, you have a customer that is tax-exempt, you'll need two pieces of information to add to their account. Go to Accounts > Manage Accounts and search for the customer you need to update.

Once your customer is selected, go to the ‘Financial Terms’ tab. Within the Tax ID field, enter the customer's Tax ID number. If you have a copy certificate on file, you will check the box. By entering information into these fields, the Tax Cert. End Date will now require you to enter an expiration for the certificate. These settings will now override the default Tax Code and taxes will NOT appear when placing a new Quote/Order. Once the certificate expiration date expires the customer will be charged taxes again.

You can also add a Tax ID within your Vendor Accounts. To add this information go to Purchasing > Manage Vendors, and search for the vendor you wish to update. Once the vendor is selected go to the ‘Account Info’ tab. Under the Account Info section enter the Tax ID into the field provided.

Creating Tax Authorities

A Tax Authority is a government agency i.e. a school or local government agency responsible for the intake of government revenue, including taxes and sometimes non-tax revenue. In the case that one of your Vendors needs to be flagged as a Tax Authority account you’ll need to record these liabilities within your General Account Ledger.

To create a new Ledger Account go to Accounting > Accounting Manager > Ledger Accounts

• To create a new Ledger entry select ‘Account’ and select ‘New Ledger Account’.

• Create a Ledger Name.

• Select the Type as ‘Liability’ from the drop-down menu.

• The rest of the defaults can be left as is.

• Select ‘Save’.

To assign a specific Vendor as a Tax Authority account go to Purchasing > Manager Vendors.

• Select the Vendor you wish to update or during the creation of the account.

• Go to the ‘Account Info’ tab.

• Under ‘The Vendor is’ section check the box that states ‘a tax authority’.

  

• Once you’ve completed your change select ‘Save’ to update.

• Now go to the ‘Posting Accounts’ tab.

• Under the Accounts Payable drop-down menu select the new Ledger Account you’ve created.

  

• Add a description for your reference.

• Once you are complete select ‘Save’ to update your changes.

Now that it is completed you can either add a new Tax Code or update an existing Tax code to include your specific Vendor. To do so, go to Admin > Administrator and select the ‘Tax Codes’ tab.

• Type a Code i.e. Seattle

• Enter the Rate - 3.6%

• Tax Authority - Choose the Vendor from the drop-down menu

  

• Tax State - WA

• Enter a description - Seattle City Tax Rate

• Select ‘Add’

• What now does this mean- should we have duplicate Tax codes to accommodate these vendors?

Creating Tax Summary Reports

In the event, you want to create Tax reports from the top menu go to Reports > Reporting Engine

• Select from the collapsible menu ‘ Company and Financial’ then choose ‘Taxes’

• The menu will expand and show you all available tax reports available to you.

• The following reports are available to you:

  • Sales Tax Detail

  • Sales Tax Detail - Shipping info

  • Sales Tax Group Detail

  • Sales Tax Summary

• Once you have selected the report you want to run select ‘ Run Report’ i.e Tax Summary

  • Parameter fields will appear so you can choose exactly what you want to report on.

• Select ‘Run Report’

• The report will appear

• At this point, you can export, print, or email this report.

In conclusion, this is how you set up your Tax Codes, Tax Code Groups, Tax Authority and run reports based on your specific needs.