Created taxes can be applied in orders, sales, invoices, and posting. To do this, you need to configure the applicable rules on the “Settings > Taxes” page.

There are different settings for the order/sale/invoice and posting documents.

Tax Applying to Goods in Orders/Sales/Invoices

Step 1. In the “General Rules” section on the “Orders and Sales” tab, click the “Add Tax” button.

Step 2. Select one of the previously created taxes from the list or create a new one.

You can apply several taxes at once. To do this, add all required taxes and set the priority. The order of tax application works as follows: the first tax in the list has the highest priority. To change the priority, click the vertical triple-dot and move the tax in the list.

As a reminder, Included Tax is a tax that is added to the cost of goods. When using this type of tax, you need to specify the purchase price of the goods, taking this tax into account during the posting procedure.

The Imposed Tax is a tax that is paid additionally and is calculated from the final cost of goods/services. With this type of tax, the final amount of the order/sale will differ from the total amount of items in that order/sale as the tax will be calculated from the final sale amount.

Example 1. Calculating Two Included Taxes

Let's say there are 2 tax rules for your company in the following order: VAT 20% and Excise 5%.

There is a product that has a purchase price (including taxes) of $200, and a retail price of $400.

To calculate the amount of tax included, we first calculate the lowest priority tax using the formula: (The body of the tax multiplied by the percentage of tax) divided by (100 + percentage of tax).

5% (Excise tax) of $400 (Tax Body) = (400 * 5) / (100 + 5) = 2000 / 105 = $19.05 (this is the amount of tax “Excise”).

Now we subtract the “Excise” tax amount from the Tax Body: $400 — $19.05 = $380.95 (we get the new Tax Body).

Now we can calculate the following included tax:

20% (tax “VAT”) from the amount of $380.95 (Tax Body) = (380.95 * 20) / (100 + 20) = 7619 / 120 = $63.49 (this is the amount of tax “VAT”).

The total amount of taxes included: $19.05 + $63.49 = $82.54.

As a result, when selling such goods the total amount of sales will not change, and the printed documents will show the amounts of these taxes.

Example 2. Calculating Two Imposed Taxes

Let's say there are 2 tax rules in your company with the following order: 5% State Tax and 20% Federal Tax.

There is a product that has a purchase price of $200, and a retail price of $400.

To calculate the amount of tax imposed, we first calculate the highest priority tax: 5% (State Tax) of the amount of $400 (Tax Body) = $20 (this is the amount of State Tax).

Now we add the amount of tax “State” to the Tax Body: $400 + $20 = $420 (we get a new Tax Body).

Now we can calculate the following imposed tax: 20% (tax “VAT”) of the amount of $420 (the Tax Body) = $84 (this is the amount of tax “VAT”).

The total amount of taxes imposed: $20 + $84 = $104.

As a result, the final amount of sales will change due to the calculation of the imposed tax. The cost of goods $400 + imposed tax $104 = total amount of sales $504. The printed documents will show the amounts of these taxes.

Example 3. Charging a Flat Tax

A flat tax is a type of imposed tax, the value of which is stated as a certain amount.

Suppose there are 2 tax rules in your company: $100 Flat tax and 5% State tax (imposed).

There is a product that has a purchase price of $200, and a retail price of $400.

To calculate the amount of tax imposed, we first calculate the highest priority tax: $100 (Flat) add to the amount of $400 (Tax Body) = $500 (new Tax Body).

Now we can calculate the next imposed tax: 5% (State Tax) of the amount of $500 (Tax Body) = $25 (this is the amount of StateTax).

The total amount of taxes imposed: $100 + $25 = $125.

As a result, the final amount of the sale will change due to the calculation of the imposed tax. The cost of goods $400 + imposed tax $125 = $525 total amount of sales. The printed documents will show the amounts of these taxes.

Tax Applying to Goods in Posting

Step 1. In the “General Rules” section on the “Posting” tab, click the “Add Tax” button.

Step 2: Select one of the previously created taxes from the list or create a new one.

Similar to configuring tax rules for orders/sales/invoices, you can apply one or more taxes for posting documents. Priority is also determined by the order of the tax rules in the table.

If you have a special tax rule for some products, services, or categories, then you can set up exceptions in Orderry. Learn more in this article.

Editing and Deleting Tax Rules

To edit the order of tax rules, hold down the vertical three-dot and drag the rule to the desired location.

To delete a tax rule, click the delete icon to the right of the tax rule name.

When you change the order or delete the tax rules, the calculation of the tax amount in the already created orders, draft postings, and invoices changes. Consequently, you need to choose what to do with such documents: recalculate by the new rules or leave by the old rules, which applied at the time of creation or the last saving.

For such cases in the Settings section you can set a certain default action:

1. Ask for every document. Set this by default to select the recalculation method in the documents each time.

For example, you created an order, added work and materials from stock, and then changed the tax rate. When you open the order again and make any changes to it, a pop-up will appear while saving the order. In there you will be able to select:

  • Recalculate by the new rules. The new tax rate will apply to all items in the document;

  • Don't recalculate. The old tax rate will be applied to all positions in the document.

2. Don't recalculate and don't ask. Set this by default so that the old tax rates remain unchanged in the already created documents.

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