Tax Items are the separate local, state, and/or federal agencies for collecting sales tax. Creating and updating tax items will be important for accurately reflecting the business tax structure. Knowing how and when to update tax items minimizes any potential errors and keeps your business up to date with changing regulations and business needs. Tax items are combined together to create tax groups. Customers are assigned a tax group for their location and taxes are applied based on tax groups.
Table of Contents
- Creating a New Tax Item
- Cloning a Tax Item
- Filtering the Tax Item List
- Setting Tax Items Inactive or Reactivate
Navigate to Settings / Accounting / Tax Items.
Creating a New Tax Item
1. Click the Tax Item button to add a new tax item.
2. The Add Tax Item dialog will open. Enter the tax item details. Fields marked with a red asterisk are required.
a. Name – Enter a name that identifies the tax agency. This will create a corresponding liability account in the chart of accounts under Tax. The tax item list is sorted alphabetically; consider this when choosing a naming convention.
b. Tax Rate – Enter the rate of tax for this agency.
c. Name on Documents – Enter the name that customers will see on estimates and invoices. This may be required in some jurisdictions (for example, Canada) where individual agency names and tax rates must be listed.
d. Associated Tax Groups – Select the tax group(s) for this item. Taxes can be grouped and assigned a group name; customers are assigned a tax group for their location and taxes are applied based on tax groups.
e. Municipality Name – Optionally enter the specific tax agency. Tax agency information is not visible to customers and is for reference (e.g., for accountants).
f. Account Number – Optionally enter the sales tax liability account number.
3. Click Save.
Cloning a Tax Item
1. Navigate to Settings / Accounting / Tax Items.
2. Find the tax item in the list and click the Actions button for that row.
3. Click Clone. An exact copy of the tax item will open in an Add Tax Item (or edit) dialog.
4. Change the tax item details as needed (Name, Tax Rate, Name on Documents, Associated Tax Groups, Municipality Name, Account Number). Ensure the name is unique and required fields are completed.
5. Click Save.
Filtering the Tax Item List
You can control which columns appear on the Tax Items list and whether inactive tax items are included by using the settings for the list.
1. Navigate to Settings / Accounting / Tax Items.
2. Click the Settings icon near the top of the Tax Items list.
3. A settings dialog will open with the following options:
a. Column selection – Use the column selector to choose which columns are displayed on the screen (for example, Name, Tax Groups, Tax Rate). Select or clear columns to show or hide them in the list.
b. Show Inactive Records – Check this box to include inactive tax items in the list. When unchecked, only active tax items are shown. Use this when you need to view, reactivate, or manage inactive tax items.
4. Apply your choices and close the settings dialog. The list will update to show the selected columns and, if enabled, inactive tax items. Inactive items may appear in italic or otherwise indicated in the list.
Setting Tax Items Inactive or Reactivate
Set a tax item inactive
1. Navigate to Settings / Accounting / Tax Items.
2. Select the tax item that needs to be set inactive.
3. Click the Actions button on the right for that row.
4. Click Set Inactive.
5. To set multiple tax items inactive, check the box for each tax item in the list, then select Set Inactive from the bulk actions if available.
Reactivate a tax item
1. Open the Settings icon for the list and check Show Inactive Records so inactive tax items are visible.
2. Find the inactive tax item in the list and click the Actions button for that row.
3. Click Set Active.