Taxes

Taxes are an integral part of any business. The taxes applicable to your business are determined by your business’s location and type. In Zoho Books, there are country specific taxes that you can configure according to your business’s needs.

Tax Rates

In this section, you can create the tax rates that are applicable for your business based on the goods and services that your business deals with.

Add Tax Rate

To create a new tax rate:

Go to Settings in the top right corner of the page.
Select Taxes under Taxes & Compliance.
In the Taxes pane, select Tax Rates.
Click + New Tax in the top right corner of the page.
Fill in the Tax Name and the Rate (%) at which it’s levied.

If you are currently tracking taxes under separate accounts, you can choose to track taxes under a single account. Here’s how:
Go to Settings in the top right corner of the page.
Select Taxes under Taxes & Compliance.
In the left sidebar, select Tax Settings.
In this page, scroll down and select Track taxes under a single account under Tax Tracking Account Preference.
Click Save.

After you create a new tax, you can associate it to your items or apply it when creating a transaction.

Items

A default tax rate can be set for an item in Zoho Books. Doing so, the next time you create a transaction for this item, its set tax rate will be shown automatically.

Transactions

The tax rates for different items can be changed at the transaction level.

Edit Tax Rate

You can make changes to any tax rate that you have added in Zoho Books. Here’s how:

Go to Settings in the top right corner of the page.
Select Taxes under Taxes & Compliance.
In the Taxes pane, select Tax Settings.
Hover over the tax and click Edit.
After making the necessary changes, click Save.

If this tax has already been applied in some transactions, you will be asked to confirm if you wish to update the new tax rate in those transactions as well.

Warning: Editing the tax rates will update them in active recurring profiles you had created as well.

Delete Tax Rate

You can delete any tax rate that you have created in Zoho Books. Here’s how:

Go to Settings in the top right corner of the page.
Select Taxes under Taxes & Compliance.
In the Taxes pane, select Tax Rates.
Hover over the desired tax and click the Delete icon.
Click OK to confirm.

Create Taxes in Bulk

To create taxes in bulk:

Go to Settings in the top right corner of the page.
Select Taxes under Taxes & Compliance.
In the Taxes pane, select Tax Rates.
Click the dropdown next to + New Tax on the top right corner of the page and select Create Taxes in Bulk.

Enter the Tax Name and Rate (%).
Click + Add Tax button to add more taxes.
Choose a common Tracking Preference for all the taxes added and click Save.

Zoho Books will create the specified taxes.

In Zoho Books, you can configure how the taxes should be tracked. Let’s take a look at them.

Track Tax Account

The taxes that are applied under your sales and purchase transactions can be tracked under:

Track Taxes Under A Single Account

The taxes applied on your sales and purchase transactions will be tracked under a single account. By default, these taxes will be tracked under the Tax Payable account.

Track Taxes Under Separate Accounts

If you would like to track the taxes applied to your sales and purchase transactions under different accounts, you can do so. The taxes applied on the sales and purchase transactions will be tracked under the Output Tax and the Input Tax accounts respectively.

Insight: The setting will be applicable for other Zoho Finance applications as well.

To start tracking taxes under separate accounts:

Go to Settings in the top right corner of the page.
Select Taxes under Taxes & Compliance.
In the Taxes pane, select Tax Settings.
Select Track Taxes Under Separate Accounts.

Insight: If you have chosen to track taxes under separate accounts, you can choose to track taxes under a single account while creating a new tax or editing an existing one.

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