Taxes are levies imposed by a state or similar agency. There are many types of taxes. From a time and expense management perspective, the related taxes are sales or use taxes and value added taxes. Generally these are taxes that are either paid by a company for goods and services they purchase or are collected by a company for goods or services they sell.
When recording expenses paid, some taxes are recoverable, meaning a refund will be provided from the agency that imposed the tax. This is the case for some VAT taxes paid in Europe (or GST/HST in Canada) on expense items. In these instances, it is important to identify the taxes paid and report on them effectively.
There can also be multiple levels of taxes. Some states in the US charge a state sales tax and also a city or county tax. In Canada some provinces have PST and GST. These taxes are supported in Accorto Cloud Plus by assigning levels to the different taxes and each is applied accordingly.
Taxes are imposed by applying a tax rate to the sales price. This tax is calculated by multiplying the sales price by the tax rate. In some jurisdictions prices displayed must be the final price (tax inclusive). In those instances, Accorto derives the amount that represents the item and the tax.
Example set up of Sales Tax, VAT and GST/PST/HST taxes can be created by selecting the tax wizard found on the Accountants link from the T&E Workbench.
When creating or updating Taxes keep in mind the following settings:
Use the Receivables check box to designate a tax you charge to customers. These taxes are collected by you and then submitted to the tax authority.
Use the VAT check box to designate a value added tax. When this tax represents taxes that you pay, some may be recoverable for some expenses. Leave this check box unchecked for sales and use taxes.
To create a new tax click New Tax Rate in the related list for the appropriate tax.
Enter the Tax Rate The percentage of the value of an item that is paid as a tax. If a tax is inclusive, the price displayed includes the tax. Otherwise the tax is applied to the item price. (as a percentage). A value of 9.5 would calculate a 9.5% tax.
Use the Valid From date to indicate the date this tax rate The percentage of the value of an item that is paid as a tax. If a tax is inclusive, the price displayed includes the tax. Otherwise the tax is applied to the item price. is valid. When determining the tax rate The percentage of the value of an item that is paid as a tax. If a tax is inclusive, the price displayed includes the tax. Otherwise the tax is applied to the item price., the most current, active rate will be used provided that date does not exceed the record date.
Use the Tax Rate The percentage of the value of an item that is paid as a tax. If a tax is inclusive, the price displayed includes the tax. Otherwise the tax is applied to the item price. Group if this rate is part of a compound or multiple tax, for example GST Goods and Services Tax applied in some Canadian provinces and PST Provincial Sales Tax applied in some Canadian provinces. in Canada or city tax and state tax in the US.
Select a Financial Account this tax should use for creation of general ledger entries.