How to: Set Up Sales Tax for Purchase and Sales Transactions

To calculate sales tax for purchase and sales transactions, you must set up the following prerequisites:

Vendor card. For more information, see Vendor Table and Vendor Card Window.
Customer card. For more information, see Customer Table and Customer Card Window.
Item card. For more information, see Item Table and Item Card Window.
Fixed Asset card. For more information, see Fixed Asset Table and Fixed Asset Card Window.
Location card. For more information, see Location Table and Location Card Window.

The following procedure describes how to set up sales tax in the customer card, but the same steps also apply to the vendor card.

To set up sales tax for a customer

In the Search box, enter Customers, and then choose the related link.
Select the required customer, and on the Home tab, in the Manage group, choose Edit.
On the General FastTab, in the State Code field, select the state code for the customer.
On the Tax Information FastTab, in the Tax section, select the Tax Liable check box to specify that the customer is liable for sales tax.

Note

When you post transactions involving the vendor or the customer, the state code is used with the tax area code and the tax group code to calculate the sales tax. For more information, see How to: Set Up Indian Sales Tax.
Choose OK.

In the Search box, enter Items, and then choose the related link.
Select the required item, and on the Home tab, in the Manage group, choose Edit.
On the Invoicing FastTab, in the Tax Group Code field, select the tax group code for the item.

Note

You can use the tax group code along with the tax area code to determine the sales tax percentage and the general ledger accounts for sales tax posting.
Choose OK.

In the Search box, enter Fixed Assets, and then choose the related link.
Select the required fixed asset, and on the Home tab, in the Manage group, choose Edit.
On the Posting FastTab, in the Tax Group Code field, select the code for the tax group to which the fixed asset belongs.

Note

You can use the tax group code along with the tax area code to determine the sales tax percentage and the general ledger accounts for sales tax posting.
Choose OK.

In the Search box, enter Locations, and then choose the related link.
Select the required location, and on the Home tab, in the Manage group, choose Edit.
On the General FastTab, in the State Code field, select the state code for the location.

Note

You must define the state code for each location card if the company has more than one location.
Choose OK.