Taxes

Your business’ financials are affected by regulatory taxes and each organization has different country specific taxes to adhere to. You may have added Taxes in the Quick Setup section. You can edit or add further Taxes through the Settings section.


Enabling Tax for your organization

Before adding taxes, you’ll have to enable them for your organization. To do that, follow the instructions below:

Enable Tax

You can also enable Tax for your organization as early as while creating it. In the organization creation page, just check the box that says Is your business registered for tax?

Enable tax button

Note: If you have enabled a Recurring invoice profile or connected your account to Stripe or done both, you will be prompted to enter a default Exemption Reason and Tax Authority.

Recurring profile exemption

Alternatively, you can skip the process of manually determining and associating sales tax rates to your transactions, by using the Avalara integration. Click here to know more about this option.

Disabling Tax

To disable tax, navigate to Settings -> Taxes -> Disable Tax, available on the top-right corner.

Note: You can disable tax only if there are no transactions associated with tax.


Adding New Taxes

To create or add a new Tax, follow steps as below:

New tax

Note:

What is a Compound Tax?
In some countries you might have to collect more than one tax from your customers. It is for you to pay to your local province and another to the federal authority.
In certain cases, the provincial tax is applied on the total that includes the item or invoice amount as well as the federal tax amount. Such taxes are called as Compound Taxes.

What if I check the “This is a value added tax” box off?

It will be considered as a Non-Value Added Tax. In some provinces, tax on purchases cannot be reclaimed. In this case, the tax cannot be treated as a liability but an expense.


Editing Taxes

To edit an existing Tax follow steps as below:

Edit tax

Update Tax Rate


Deleting Taxes

To delete an existing tax follow steps as below:

Delete tax


Adding a New Tax Group

To create a Tax Group, follow steps as below:

Add Tax group


Adding a New Tax Exemption

There might be situations where you are exempt from paying taxes because of the item or the customer to whom you are selling the product. For example, the sale of medicines is exempt from sales tax in New Jersey.

To create a Tax Exemption, follow the steps below:

Add Tax Exemption


Adding a New Tax Agency

To create a Tax Agency, follow the steps below:

Add Tax Exemption


Other Actions

You can mark any one of the taxes added as the default tax. Default Tax can be useful for the following scenarios.

To mark a tax as the default tax, hover the cursor next to a particular tax and click on the mark as default button.

You can also delete a tax by clicking on the Trash icon.

Tax Other Actions

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