To begin using Sales Tax in Eautomate, navigate to Tools/Options/Tax Options and select and enable the Tax Engine as shown below: (Note: This post will be how to use EAuto with their built in Tax Engine)
Next, you will need to create Tax Authorities in Tools/Lists and Codes/Tax Authorities
Creating Tax Authorities
A tax authority is any entity that has the authority to collect taxes from your company. For example, you will probably need to create a tax authority for your state or province, as well as the federal government. You may need to create additional tax authorities such as region, county, or city depending on the context in which your company exists. These tax authorities are combined into tax codes, which are assigned to customers. You use tax authorities to define which tax flags are taxable and what rate to tax each flag. There are six default tax flags in e-automate. They are:
See tax flags drop-down below:
Each of the above tax flags can be defined using a tax authority. Within the tax authority you define how much tax each flag is to be assessed and whether or not there are specific rules (Tax Exceptions) for a specific tax flag. The tax authority is also used to set an invoice exception. Invoice exceptions are rules that e-automate uses to constrain the amount of total tax that can be charged by authority per invoice.
Tax Flag: (Example, freight could be excluded from the taxes assessed)
Tax Exeption: (The last type of exception is the Item Unit exception)
Creating Tax Exceptions
You use a tax exception in e-automate to limit the amount of tax that can be assessed, or to define lower and upper limits to the taxes assessed on charges (prices). You can create and use three different types of exceptions: Invoice, Tax Flag and Item Unit exceptions. All three can be used simultaneously for your taxing circumstances. Note: If you do use all three, e-automate will calculate the lowest tax that should be charged to the customer based on your exception definitions starting with the Item Unit, then the Tax Flag and finally the Invoice exception.
The Invoice exception is used with individual invoices. The Invoice exception defines the maximum calculated tax amount that can be assessed on an invoice per tax authority. E-automate calculates the taxes as usual for each tax authority and then applies the exception rule to each authority. With the authorities calculated, e-automate sums up the tax for each tax authority and displays it on the invoice.
Also available to limit taxes is the Tax Flag exception. The Tax Flag exception can be defined either by Tax Limit or Tax Basis. You use Tax Limit to limit the maximum dollar amount of tax that can be charged to a customer. The Tax Basis is used to define lower and upper limits on the charges (prices) that a customer is assessed taxes. For example, you could specify a limit using the Tax Basis rule and set a lower limit of $0 and an upper limit of $500. If you had specified such a range of $0 - $500, and then set a charge amount of $250, e-automate would tax $250 dollars of the charge (price). If you were to charge an amount of $600, e-automate would assess taxes on $500 because $500 falls within the taxable range. The system would not tax the remaining $100 because it falls outside the taxable range. If you wanted to specify a different tax for amounts over $500 you would then create a second tax authority with the Tax Flag exceptions defined for the range above $500.
Another feature of the Tax Flag exception allows e-automate to group charges (item prices) that share the same tax flag together before it applies the Tax Limit or the Tax Basis rules. This rule applies on all invoices in e-automate from Sales invoices to Service invoices. e-automate groups charges (prices) linked to the same tax flag and then applies the Tax Flag exception.
The previous screenshot sample showed tax flags, and the one below will give samples of invoice exceptions:
The last type of exception is the Item Unit exception. You can define this exception using Tax Limit or Tax Basis as described above. The Item Unit exception is unique because it is applied at the individual charge (item) level. This exception handles one charge at a time. If you have added more than one of the same charge (item) on an invoice, e-automate looks at each quantity of an item (charge) individually to apply the exception. With all the individual charges calculated e-automate sums up the charges and displays the tax on the invoice.
Once you have your tax authorities in place, you can begin combing authorities to put in place tax codes for the needed jurisdictions.
If the e-automate interface does not accommodate your tax rules, contact Customer Care for assistance. Customer Care can work with you to add customized tax flags and/or taxing procedures for a fee.
Note: E-Automate DOES NOT HAVE a utility to update tax authorities. See this post for how to manage your tax authority rate changes.
Creating Tax Codes (Group Authorities)
A tax code is a grouping of tax authorities. Tax codes are assigned to customers, and tell e-automate how to charge any taxes owed on transactions with that customer. Before you can assign a tax code to a customer, you must assign tax authorities to that tax code.
For Example, the tax code for Fayetteville, AR is made up of 3 tax authorities (City, County and State) Each authority has its own tax rate (ie. 2.00, 1.25 and 6.5% respectively for a total of 9.75% tax ) on all sales made in the City Limits of Fayetteville, Arkansas. Three different Authorities will need to be created, reflecting the Level of Taxation (city, county, state), the rate, and excluding any charges that don't fit this profile. (Example, freight could be excluded from the taxes assessed.)
Another Example: if your business is based in Los Angeles County, California, and you are selling widgets to customers who live in that same county, you will need to charge state sales tax on those widgets as well as county tax.
To do that automatically for every transaction with every customer in that county, you would simply need to create one tax authority for the state of California and one tax authority for Los Angeles County. You would then create a tax code that combines the two tax authorities and assign it to those customers.
Sample of assigning multiple tax authorities to a tax code:
Customer and customer location may have different tax codes. Further more, contracts can have a different tax code assigned to each equipment record, allowing you to bill to same bill to, but charge appropriate rates, or override the tax codes b/c you’re billing to a 3rd party.
Once you have your tax codes in place, you may assign them at the customer level on the customer record as shown:
They may also be assigned on the location customer.
Setting Equipment Level Tax on Contract
Another place to assign tax codes is within a contract as shown on the billing tab of the contract. By selecting a bill to customer, the contract will inherit the Sales Tax Codes of that customer. If you have multiple locations for the customer, but in different tax jurisdictions, you may tax each piece of equipment on the contract at the appropriate rate by selecting the Use Equipment Tax code check box as shown below:
Once that checkbox is checked, it will open up the tax code line and you may select the appropriate tax code: (If the contract has billed, the checkbox may be grayed out, in which case you would need to create a revision and fix the code before billing)
NOTE: When a contract is initially created, it will inherit the tax code from the customer record. These can be overridden at the contract or equipment level as indicated above...however, changing the tax code (not the rate within the code) on the customer will have no effect on existing contracts.
E-automate does not have a utility to update tax authorities. See this post for how to manage your tax authority changes.
Related: Best Practices - Should I Collect Sales Tax in House, and if so, how will I Maintain Tax Tables? See Post here.
Click Here for Best Practices on Setting Tax Options in Eautomate