Setting up sales tax

What this does

Three settings, in three places, make sales tax work. Set all three before the first taxed invoice.

The rate that's charged

Settings → Shop → Tax Rate (%). This one number is what every estimate, work order, and invoice applies to its taxable lines. It was one of the four numbers asked during onboarding. If your city, county, and state rates add up to 8.25%, this is 8.25.

The rates and groups that label it

Accounting → Sales Tax (the same screen is also under Settings → Sales Tax) holds two lists.

Tax Rates: each jurisdiction's rate by Name, Type (State, County, City, District), and Rate (%), with an Active switch. Enter your state rate, county rate, city rate, and any special district.

Tax Groups: a named bundle of rates that applies together (Amarillo Sales Tax = Texas 6.25 + Amarillo 2.00). Tick the rates that belong. One group is the Default Tax Group.

Today these don't change what's charged; the shop rate does. They drive the Sales Tax Liability report, which splits collected tax by jurisdiction for the return. Keep the default group's rates summing to the shop rate, or the report's rate column and the tax on your invoices won't agree.

The account it posts to

Every taxed invoice credits a Sales Tax Payable liability account, and remitting the tax debits it back down. Set it at Accounting → Settings → Sales Tax Payable Account; the picker lists your liability accounts. The standard chart includes 2200 Sales Tax Payable, and seeding the chart points the setting at it automatically when it finds an account by that exact name.

If a taxed invoice refuses to issue with "no Sales Tax Payable account is set," that field is empty. Pick an account and issue again. If the picker has nothing suitable, add a liability account under Chart of Accounts first.

Before you start

Settings → Shop needs settings.shop; the Sales Tax rates screen needs settings.shop too; the chart needs chart_of_accounts.edit.

Common problems

Tax on invoices changed and I didn't touch the rates screen. Someone changed Tax Rate (%) on the shop profile. That's the number that's charged.

Rates screen shows 8.25 and invoices charge 8.0. The shop rate is 8.0. Make them agree.

We're in two jurisdictions (mobile work across a county line). The app charges one shop rate. Create both groups for reporting, but the invoice gets the shop rate; adjust by hand or with a fee line for the rare out-of-area job.