Almost every store must charge taxes on the products and services sold. But there are many local laws controlling when a sale is taxed and how much tax is to be charged. Experience has shown that POSitive can handle almost any tax requirements.
General Principles
Inventory
| • | An inventory product or service is either taxable or not taxable. If some customers will have to pay tax on it, then it is taxable. If no one will ever pay tax on it, then it is non-taxable. |
| • | All inventory is assigned to a category which controls taxation. The category is defined with a "tax category" named "Merchandise" (taxable) or "No Tax" (non-taxable) which then makes the inventory item assigned to it either taxable or non-taxable. |
| • | If an inventory product or service is taxed at a different rate than the "Merchandise" rate, then an additional "tax category" must be created. For example, labor charges may have a different rate. Or an inventory item may require a luxury tax plus the regular state tax. |
| • | The selling price of an inventory item normally does not include the tax. However, there is an option to make the advertised selling price include the tax. |
Customers
| • | A customer either pays taxes or is exempt from paying taxes. |
| • | How much tax the customer pays is defined by locality laws such as, if the purchase is for resale, if the purchase is made on the premises, if the purchase is delivered to the customer, and various other criteria. |
| • | Each customer is assigned to a "tax group." At the outset, POSitive only has two tax groups: State Tax (everyone who has to pay tax) and Tax Exempt (everyone else who does not pay tax). To keep things simple, Tax Exempt can be used for wholesalers, government offices, and out of state sales. |
| • | Walk-in customers, Quick Sale, who do not identify themselves for the customer list are charged a pre-set tax rate. ("Quick Sale Tax Group") |
| • | Additional "tax groups" can be created. If you must charge tax based upon the county taxes where the customer resides or where the product will be delivered, then you should create a County tax group. |
Tax Rates
| • | Tax rates are entered as decimal numbers. A tax rate of 7.85% is entered as .078500. |
| • | POSitive can track two tax rates at a time, but just one is sufficient. ("Tax1 Description" and "Tax2 Description") |
| • | Tax rates can have a dollar limit. If the item sells for more than or less than a set amount, then the tax rate is applied. ("Minimum Amount" and "Maximum Amount") |
| • | More than one tax rate can be assigned to a tax category. |
| • | The first tax rate can be included when assessing a second tax rate. ("Include Previous Tax Rate") |
| • | A tax rate can be assigned to purchase order cost. |
| • | A Change In Tax Rates: If legislation laws mandate tax rate changes, simple editing of the existing tax rate to the new rate is all that has to be done. The new rate will take effect immediately for new invoices and is not applied to historical sales. |
Invoicing
| • | A mix of taxable and non-taxable inventory on an invoice properly charges tax per line item. |
| • | If a mix of taxable and non-taxable inventory is "packaged" together under one selling price only a preset tax is applied. ("Packages Sales Tax") |
| • | Under special circumstances, CTRL-X can be used to remove tax of a line item on the invoice. ("No Tax" Tax Category") CTRL-X will allow you to choose any defined tax category and apply it to the line item. |
| • | Under special circumstances, CTRL-Y can be used to set a border between items on the invoice so that items on one side will be taxed and items on the other side will not be taxed. |
| • | Tax rates can be included or excluded if the invoice contains an item from a specific tax category. ("Tax Rate Exception") |
| • | Sales Tax Rounding is a feature in POSitive which can protect you from under collecting taxes. ("Always Round Sales Tax Up") |
| • | Generally, tax is calculated on a line item basis. POSitive provides the option to calculate tax after the invoice is totaled. ("Base Tax On Invoice Total") |
Sales Tax Reports
| • | Tax is reported to the Sales Tax report from Invoices only. An order or layaway must converted to an invoice before taxes are reported. |
| • | Tax reports can be generated on a date range. |
| • | Tax reports can include details or just summary information. |
| • | Tax reports can be verified, (original invoices are re-read and taxes recalculated) but should be done with caution if there has been a tax rate change in the given time period. |
Tax Override (United Kingdom)
In the UK, clothing for children is taxed differently than clothing for adults. The Tax Override option is available on a per inventory item basis, however it is only activated manually per item based upon the size of the item. (see Inventory Item Tax Override)
