Steps:

In this demonstration, a simple sales and a purchase tax scheme is created.

Setting up a sales tax scheme

Setting up a purchase tax scheme

a. Setting up a sales tax scheme

In this demonstration, a sales tax component and tax scheme is created for a given sales in a state, in this case, a State Sales Tax for Kentucky. The tax components are set up first before setting up the tax scheme.

Step 1: Setting up the tax component

1. Select Tax Component under the Setup menu of the System Manager module. The Tax Component setup form will display.  
   Note:
   Interprise Suite has included 2 default tax components, Purchase No Tax and Sales No Tax which are both zero rated tax components.
2. To set up a tax component, click on the New button from the toolbar menu. You will be brought to the Detail tab.
3. See the example below:

 

Tax Component:	State Sales Tax of 6.00% on Goods and Services
Tax Information:
Tax Code:	Kentucky Sales Tax
Tax Description:	Kentucky Sales Tax
Account Code Description: (a)	Sales Tax
Tax ID Number: (optional)
Country: (b)	United States of America
Tax Based On: (c)	Percent of Sales/Purchases
Decimal Round Up: (optional)	2
Apply On: (d)	Extended Price
Computation Rules:
Percentage of Goods and Services:	100%
Minimum taxable amount:	0
Maximum taxable amount:	99,999,999
Percentage of Tax/VAT to apply: (e)
a. Flat Rate:	6.00%
b. Postal Rate:	Tax Rate from postal code. See Also: System Setup > Postal Codes
Minimum Taxable Amount:	0
Maximum Taxable Amount:	99,999,999

 

Notes:
a – any sales tax liability account

b – must be the same country as the one setup in your company information otherwise you will not be able to see the tax scheme in the pulldown lists.

c - The options are:

• Percent of sales/purchases – tax applied on percent of sales or purchases
• Flat Amount per Unit -  flat amount tax is applied per unit of stock
• Percent of Cost - tax is applied on percent of cost
• Percent from Tax Detail – for compounded tax details. See Also: Compounded Tax Scheme

d - The options are:

• Extended Price – tax would be applied on the Extended Price
• Standard Cost – tax would be applied in the Standard Cost

 

e – In the What Percentage of the Tax/VAT is Applied to the Net Goods and Service field, you may choose from the options below to specify the tax/vat percent to apply.

1. Flat Rate – enter the tax percent value 
2. Postal Rate – get tax percent value from the postal codes. See Also: System Setup > Postal Code.

Step 2: Setting up the tax scheme

To set up new sales tax scheme,

1. Select Tax Scheme under the Setup menu of the System Manager module. The Tax Scheme form will display.
   Note:
   If your company was set up using US settings, Interprise Suite includes 2 default tax schemes, “Purchase No Tax” and “Sales No Tax” which are both zero rated taxes.
2. Click on the New button from the toolbar menu. You will be brought to the Details tab.
3. In this example, the following details are provided:
   
   

   Tax Scheme:	Kentucky Sales Tax
   Tax Information:
   Tax Code:	Kentucky Sales Tax
   Tax Description:	Kentucky Sales Tax
   Country: (a)	United States of America
   Tax Type: (b)	Sales
   EC Goods and Service: (c)	NA
   EC Sales or Purchase: (d)	NA
   EC Notional Rate: (e)	NA
   Tax Components:
   Selected Tax/VAT Component: (f)	Kentucky Sales Tax

 

Notes:
a – Country: Must be the same as the country setup for the company information otherwise, you will not be able to see the tax scheme in the pulldown lists. Also, the country must be the same as the components.

b - Tax Type: Select Sales or Purchases
c - EC Goods or Service: Select Goods, Service or NA. Applicable to UK Tax/VAT.

d - EC Sales or Purchase: Select Sales, Purchase or NA. Applicable to UK Tax/VAT.

e - EC Notional Rate: Enter the EC estimated rate percent. Applicable to UK Tax/VAT.
f - Tax Components: Select from the available tax components. Select the tax component from the Existing Tax/VAT Component section and click on the > button to move components into the Selected Tax/VAT Component section.

 

b. Setting up a purchase tax

Step 1: Setup purchase tax component

 

Tax Component:	1.75% on purchases of goods and services
Tax Information:
Tax Code:	Kentucky Purchase Tax
Tax Description:	Kentucky Purchase Tax
Account Code Description: (a)	Purchase Tax
Tax ID Number: (optional)
Country: (b)	United States of America
Tax Based On: (c)	Percent of Sales/Purchases
Decimal Round Up: (optional)	2
Apply On: (d)	Extended Price
Computation Rules:
Percentage of Goods and Services:	100%
Minimum taxable amount:	0
Maximum taxable amount:	99,999,999
Percentage of Tax/VAT to apply: (e)
a. Flat Rate:	1.75%
b. Postal Rate:	Tax Rate from postal code. See Also: System Setup > Postal Codes
Minimum Taxable Amount:	0
Maximum Taxable Amount:	99,999,999

Step 2: Setup purchase tax scheme

 

Tax Scheme:	Kentucky State Purchase Tax
Tax Information:
Tax Code:	Kentucky State Purchase Tax
Tax Description:	Kentucky State Purchase Tax
Country: (a)	United States of America
Tax Type: (b)	Purchase
EC Goods and Service: (c)	NA
EC Sales or Purchase: (d)	NA
EC Notional Rate: (e)	NA
Tax Components:
Selected Tax/VAT Component: (f)	Kentucky Purchase Tax

 

So that:
Extended Price $100
Rate from tax component: 1.75%

1.75% X 100 = $1.75

$1.75 + $100 = $101.75

 Next Steps:

• Assign default sales or purchase tax. See Also: Customer Class Templates | Customers Ship To Class Templates | Supplier Class Templates
• Maintain sales or purchase tax. See Also: Other Tax Options

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