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Calculating and Reporting Sales Tax In RetailEdge
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    Calculating and Reporting Sales Tax In RetailEdge

    by RetailEdge Moderator » Thu May 08, 2008 4:12 pm

    Setting Up Sales Tax Jurisdictions

    RetailEdge point of sale software calculates sales tax on a sale based on the default Sales Tax Jurisdiction(s) set for the location. This can be changed and checked by choosing Locations from the Tools|Settings menu item, modifying the location, pressing the Misc tab and then pressing the Edit Default Sales Tax Jurisdictions button.

    How RetailEdge Calculates Sales Tax

    Every item in RetailEdge is either Taxable or Non Taxable. When an item is added to a Sale it checks these settings to determine the appropriate sales tax to apply. This can be something as simple as a single jurisdiction with a percentage of the sale price, or a more complex multiple tax jurisdiction applied additively as might be used in Canada with GST/PST or a 2-tiered tax rate where different departments or classes have different tax rates or the tax rate may be different depending on the price of the item.

    How to Change Sales Taxes on a Sale

    Taxes applied to a sale can be changed on the sale a number of ways.

    1. By manually checking or unchecking the taxable checkmark on the sales screen next to the item.

    2. By associating a customer with the sale that has a tax exempt ID in their record. This will make all items on the sales screen non-taxable.

    3. By associating a customer with the sale that has a different tax jurisdiction with their record and pressing the Ship To button on the sales screen. Pressing this button will change the sales screens default tax jurisdiction to the customers. In most cases a customer will not have a tax jurisdiction associated with them and no tax will be charged on the sale.

    Reporting on Sales Tax Collected

    Sales Tax Reports

    There are two main reports in RetailEdge that you can use to calculate the amount of sales tax collected for a given period of time. The first is the Sales Tax Report. This report can be found in the Sales|Sales folder in the Report Selector. This report will show the Total Sales, Non Taxable and Taxable Sales and Sales Tax collected for each Tax Jurisdiction. This can be run as a summary report showing totals or as a detail report showing each ticket. You will be able to see which sales were returns on this report and also if you are shipping to customers with no sales tax jurisdictions associated with them, then you will be able to see the total sales that were shipped to an unassigned tax jurisdiction.

    Closing Summary Report

    The other report that shows Sales Tax is the Closing Summary Report. This will also show taxable sales, non taxable sales and sales tax collected but not by jurisdiction and totals only. This report however will show you the totals grouped by Day, Day of Week, Week, Month, Quarter or Year. So gives a little different view on the data.

    In most cases the sales tax is shown as line 5 and 6 on the closing report. You can quickly see from your Closing Summary what your sales are and the amount of Taxable and Non-Taxable sales. You should look at the top sales totals for taxable and non-taxable sales. Not the deposit total. The deposit is a number that includes adjustments to your drawer that you need to account for based on any of the adjustments shown on the report (i.e., money taken for deposits, house charges, layaways etc.). The top numbers are the ones you need.

    One exception is if you see an adjustment for Gift Cards Issued. Gift Cards will show up as a Sale (usually non-taxable depending on how your tax authority treats it) and you should run a report for Gift Cards sold for the period to remove these from the total non-taxable (or taxable) sales figure. This adjustment for Gift Cards can also include manually issued gift cards issued as donations, etc. A sales by category for the Gift Card department should quickly give you this adjustment.

    You should double check these values against the Sales Tax Reports. Taxable and Non-Taxable numbers can sometimes be a little confusing on the Closing Report and we sometimes make assumptions about whether a sale item is taxable or not. For instance, if you have an item that is taxable under a State sales tax (100% taxable) but not taxable or even partially taxable under a local tax, we are going to show the total amount as taxable on the closing report. The Sales Tax reports will clarify and show you what is going on.

    Other Useful Reports for Sales Tax Adjustments

    Many Tax/Revenue Agencies require you to identify adjustments to your total sales (discounts, refunds, labor, resale, donations, etc.) Each agency may do this differently and require different information. This is why it is important to know or think about this information when setting up your inventory. Some of the other reports that can be useful for Tax Reporting are:

    1. Discount Report. This is located in the Sales|Sales folder in the Report Selector. This will show you the total dollar amount discounted for a given period.

    2. Refunds. These will be shown on a Sales By Item Report.

    3. Labor. Labor items are typically non-taxable and put in a separate department or class. You could for instance create a department called services and some classes for Labor, Repair, etc. When creating your non-taxable items, you would put them in the appropriate class in the Services department. All sales reporting in RetailEdge is broken out by Vendor or Class or Departent or combinations of these. So if you ran a sales report sorted by Department/Class for the month for the Service department you would get a break out of your non-taxable sales for each Service Class.

    4. Resale. If you are selling items to customers for resale, then you would be selling them to specific customers. What you might consider doing is creating interests for the customers (reseller). Then any customer sales report can be filtered by this interest to give you sales to resellers.

    5. Donations. Typically we recommend that donations not go through the sales process. We recommend that donation be treated as inventory adjustments. What users do for this operation is create POs and negative receive onto the POs for these items.

    6. Freight and Rental Items. Every item in RetailEdge has a stock type. Most items are Stock Type Stock but you can setup items to be Stock Type Freight for Shipping charges and Stock Type Rental for Rental Items. All sales reports can be filtered on Stock Type and so you can easily add or remove these Stock Types from Sales reports or just report on them individually.

    These are just some ideas. Each State has different requirements that will require different reports be run to get the information out of RetailEdge (some States charge tax on shipping for instance). Also if you put 10 accountants in a room together you will probably get 10 different opinions on how you should set things up in your system. So if you are working with an accountant, you should determine what information they might want out of the program and how they need the information presented.
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