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01/31/08 01:35 PM
Some Notes on Tax Profiles  

Some Notes on Tax Profiles

When setting up a Tax Profile, keep in mind how the information will be used. The Profile Name will appear in the pulldown menu on the Invoice screen and as the name of a major subheading on the Sales Tax Summary report. Each Taxing Entity will be a column heading on the Sales Tax Summary report.

Before you set up a Tax Profile, find out if Shipping and/or Insurance are taxable in your situation. In California, for instance, if the seller merely passes on actual shipping cost, it's not taxable; but if you start adding handling or get a shipping discount that you retain, the Shipping becomes taxable. Insurance is similar. The Shipping Cost Taxable and Insurance Cost Taxable flags in a Tax Profile affect an invoice when it is created or when its Tax Profile is changed in the invoice pulldown. Changing the Tax Profile flags does not change existing invoices that refer to that Profile, so getting the flags right in the beginning can save you some work later on.

The Sales Tax Summary report is organized by Tax Profile; within a profile the invoices are grouped by whether or not they are marked Taxable. Totals are given for the entire report and for each Tax Profile. Subtotals within a Profile group are shown for Taxable and not-Taxable.

If there is no Tax Profile specified for an invoice, that invoice is included in the "Tax Profile: <blank>" section of the report. I'd rather explicitly mark the invoices, and so have a "No Sales Tax -- Outside CA" Tax Profile.

Since most of my sales are outside California, the "No Sales Tax" Tax Profile is selected in the Auction Profile as the default for new invoices.

California has a single statewide state sales tax plus possible county and city sales tax. Fortunately, a seller who only has a "business presence" in one place only needs to worry about one tax rate, the one in effect at the seller's location. If the seller has a business presence (has a branch, makes physical sales calls, or ships goods using his own vehicles) in another tax area (say, another county), then the seller has to keep track of taxes for sales in that other tax area as well. If I had to deal with this situation, I'd create a Tax Profile for each such area (e.g. "CA San Diego County" and "CA Oakland"). You would have to manually add all California Tax Profiles together for your state total when you run the Sales Tax Summary.

01/31/08 01:49 PM
Re: Some Notes on Tax Profiles new [re: Ned]  


Thanks for the info! Geez, That took some work to get all that done.

Isn't sales tax just so much fun


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