How to create a sales tax with complex options

How to create a sales tax for materials, labor, or subcontractor only

1. Go to a quote

2. At the bottom of the “Estimating” tab, click on the tax dropdown.

3. In the tax panel that pops up, choose ‘Advanced / multiple tax options..’

4. You can create multiple taxes that are levied on different aspects of an item

• Basic/general sales tax - will charge tax on the entire price of the item, most sales tax/VATS work that way

• Sales tax on labor - will charge tax only on the labor portion of the PRICE. It won’t charge JUST on the COST of the labor but on the share/percentage of the final PRICE that is a result of labor costs. If the item is subcontracted, the labor portion of the price will always be 0, so sales tax on labor will also be 0. For example, if the labor costs are $100 on an item, and the markup of the item is 2, and there is a sales tax on labor of 5%, then the sales tax will be

• Sales tax on materials - calculated the same way as sales tax on labor, with the materials cost. If the item is subcontracted, it is assumed the contractor will provide materials, so tax on that will always be zero for materials. If you need to tax materials separately, create a separate item, and uncheck the ‘subcontracted’ option from the item panel.

• Sales tax on subcontracted - when the item is subcontracted, these taxes will be subtracted. If the labor tax or materials tax also needs to be charged here, make sure you add those sales taxes into the subcontracted category too, because an item will either tax for subcontractor or labor and materials. Labor and materials can be taxed on the same item, but if the item is marked as subcontracted, then ONLY subcontracted taxes are calculated.

How to create sales tax with multiple levels of tax ie: municipal, county, state/prov, federal etc

1. Open the sales tax panel, or create new

2. Choose ‘Advanced’

3. On the category you want to add taxes to, click the plus button to add a tax

4. Name it according to the tax authority, ie: state, county, federal or the name of the tax etc

5. Put the percentage into each category and they will be added together. For example in the example that follows the tax would be 7.5 + 3 = 10.5%

What to do when multiple sales taxes compound another tax?

1. Some jurisdictions charge tax on top of other taxes

2. For example if GST is 5% and QST is 9%, on a $100 item, then the item + gst is calculated as $105. The QST is then levied on that combined value: 9% x 105 = 114.45, making the tax 14.45% total.

3. To keep them separate you can subtract the GST as 5% for to get 9.45% for QST when compounded.