Invoices with Inclusive Sales Taxes: Implementation Activity

In the following implementation activity, you will learn how to create an inclusive sales tax.

Story

Suppose that the SweetLife Fruits & Jams company provides services subject to 8.875% sales tax. This is a tax of the Inclusive type calculated at the document level. You need to create the sales tax, assign it to the TAXABLE category and the NYSTATE tax zone, and specify the tax calculation method.

Configuration Overview

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

  • On the Vendors (AP303000) form, the NYTAXDEP vendor has been configured as a tax agency.
  • On the Tax Categories (TX205500) form, the TAXABLE tax category has been configured.
  • On the Tax Zones (TX206000) form, the NYSTATE tax zone has been configured.

Process Overview

In this activity, you will review the needed system configuration on the Tax Preferences (TX103000) form. You will then create an inclusive output sales tax on the Taxes (TX205000) form, specifying its tax rate, tax category, and tax zone. Finally, on the Tax Zones (TX206000) form, you will update the settings of the NYSTATE tax zone, so that only one tax is applied to documents.

System Preparation

Before you start creating an inclusive sales tax, do the following:

  1. Launch the MYOB Advanced website, and sign in to a company with the U100 dataset preloaded.
  2. To sign in as an administrator, use the following credentials:
    • Username: gibbs
    • Password: 123

Step 1: Specifying Tax Preferences

To specify tax preferences in the system, do the following:

  1. Open the Tax Preferences (TX103000) form.
  2. In the Tax Rounding Gain Account box, make sure 83110 - Tax Rounding Gain / Loss is specified.
  3. In the Tax Rounding Loss Account box, make sure 83110 - Tax Rounding Gain / Loss is specified.

Step 2: Creating the Sales Tax

To create the sales tax, proceed as follows:

  1. Open the Taxes (TX205000) 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. On the form toolbar, click Add New Record, and specify the following settings in the Summary area:
    • Tax ID: NYINCTAX
    • Description: NY Inclusive Sales Tax
    • Tax Type: Sales
    • Calculation Rule: Inclusive Document-Level

      This setting means that the tax amount is calculated on the sum of the line amounts to which this tax is applied and should be extracted from the total document amount.

    • Cash Discount: Does Not Affect Taxable Amount
    • Tax Agency: NYTAXDEP
  3. On the Tax Schedule tab, click Add Row on the table toolbar, and specify the following settings:
    • Start Date: 1/1/1900 (inserted by default)
    • Tax Rate: 8.875
    • Reporting Group: Taxable
  4. On the Categories tab, click Add Row on the table toolbar, and select TAXABLE in the Tax Category column.
  5. On the Zones tab, click Add Row on the table toolbar, and select NYSTATE in the Tax Zone ID column.

    The created tax will be applied to all taxable items sold to customers assigned to the NYSTATE tax zone.

  6. On the GL Accounts tab, review the GL accounts assigned to this sales tax.
  7. On the form toolbar, click Save to save your changes.

Step 3: Updating the Tax Zone

To update the settings of the NYSTATE tax zone, proceed as follows:

  1. Open the Tax Zones (TX206000) form.
  2. In the Tax Zone ID box, select NYSTATE.
  3. On the Applicable Taxes tab, remove the NYSTATETAX and NYNOTAX taxes from the table. Deleting these rows is needed to avoid the application of two sales taxes to one document.
  4. On the form toolbar, click Save to save your changes.