Taxes Included in the Cost of Items: Implementation Activity

In the following implementation activity, you will learn how to configure the inclusion of taxes in the cost of purchased items.

Story

Suppose that you, as an implementation manager, need to update the settings of the New York State tax (defined as NYSTATETAX in the system) so that the taxes calculated on purchases will be automatically included in the costs of the applicable items. First, you need to create a reason code for tax-related inventory adjustment transactions; you then specify this reason code in the purchase order management preferences.

Configuration Overview

In the U100 dataset, the following tasks have been performed for the purposes of this activity:

  • On the Chart of Accounts (GL202500) form, the 65100 - Other Tax Expenses account has been created.
  • On the Taxes (TX205000) form, the NY State Tax has been configured and assigned to the TAXABLE category and the NYSTATE tax zone.

Process Overview

In this implementation activity, you will create the POTAXCODE reason code on the Reason Codes (CS211000) form. Then on the Purchase Orders Preferences (PO101000) form, in the Tax Reason Code box, you will select the reason code you have created (POTAXCODE). Finally, on the Taxes (TX205000) form, you will update the settings of the NYSTATETAX tax.

System Preparation

Before you begin performing the steps of this activity, launch the MYOB Acumatica website with the U100 dataset preloaded, and sign in as a system administrator Kimberly Gibbs by using the gibbs username and the 123 password.

Step 1: Creating Reason Code for Posting Taxes

To create a reason code for tax-related inventory adjustments, do the following:

  1. Open the Reason Codes (CS211000) form.
    Tip: To open the form for creating a new record, type the form ID in the Search box, and on the Search form, point at the form title and click New right of the title.
  2. Click Add New Record on the form toolbar, and specify the following settings in the Summary area:
    • Reason Code: POTAXCODE
    • Description: Taxes on purchase
    • Usage: Adjustment
    • Account: 65100 - Other Tax Expenses
  3. On the form toolbar, click Save to save your changes.
  4. Open the Purchase Orders Preferences (PO101000) form. On the General tab, in the Tax Reason Code box (Other section), select the reason code you have created (POTAXCODE).
  5. On the form toolbar, click Save to save your changes.

Step 2: Updating the Tax Settings

To set up inclusion of the tax in the item costs, proceed as follows:

  1. Open the Taxes (TX205000) form.
  2. In the Tax ID box, select NYSTATETAX.
  3. On the Tax Schedule tab, make sure that a row with the following settings is defined:
    • Start Date: 1/1/1900
    • Tax Rate: 8.875
    • Reporting Group: Input
  4. On the Categories tab, make sure that a row with the TAXABLE category has been added to the table.
  5. On the Zones tab, make sure that a row with the NYSTATE zone has been added to the table. The settings of the tax mean that the tax will be applied to all taxable items purchased from vendors assigned to the NYSTATE tax zone.
  6. On the GL Accounts tab, clear the Use Tax Expense Account check box.
  7. On the form toolbar, click Save to save your changes.