Set up and edit sales tax jurisdictions and rates

Set up a sales tax ID

To get started with sales tax, go to AR, Utilities, Sales Tax, Maintain. That’s where you’ll set up your sales tax jurisdictions and rates. You can add up to 10,000 jurisdictions—plenty of room to cover all your bases.

Create a sales tax ID for exempt customers

Need to track exempt sales? Just create a new sales tax ID with a 0.00% tax rate and assign it to your exempt customers. You’ll do this in AR, Customers, Maintain Customers, Inv/Stmt. This makes reporting for your exempt customers easier.

Set sales tax defaults for quotes, sales orders, and invoices

Two settings help determine whether parts are taxable when you add them to quotes, sales orders, or invoices:

• Accounts Receivable sets the default sales tax jurisdiction for each customer
• Inventory Control defines whether each part is taxable

If you assign a sales tax jurisdiction to a customer in Maintain Customers, their transactions will be taxable by default. And if you mark a part as taxable in Maintain Parts, the system will calculate sales tax when you add it to a transaction.

Edit sales tax information

Want to update a sales tax rate, ID, or description? Go to AR, Utilities, Sales Tax, Maintain. You can also choose whether freight is taxable under that sales tax.

Correct sales tax on posted invoices

I picked the wrong Sales Tax Jurisdiction when invoicing the customer

No worries. The easiest fix is to void the invoice and repost it using the correct sales tax jurisdiction. If you can't void it, you'll need to post adjustments to make things right.

How do I fix the sales tax amount on an invoice?

The simplest way is to void the invoice and repost it with the correct sales tax. If voiding isn’t an option, you’ll need to post adjustments to correct the amount.

How to void an invoice with sales tax so my sales tax reporting will be correct?

To ensure accurate sales tax reporting, always void the invoice in the current month to show any sales tax credits on your current report. 

Adjusting sales tax on credit or debit memos

How do I adjust tax reporting when I post a credit or debit memo to an invoice?

The process of adjusting the sales tax depends on whether you're posting a credit memo or a debit memo.

• Credit Memo: Sage BusinessWorks automatically calculates the sales tax and adjusts the sales tax reporting for you
• Debit Memo: Manually add the sales tax adjustment in the debit memo's distribution section when increasing the invoice amount

I got a message that Sales Tax Reporting has changed after posting a credit memo to an invoice

If you see a message saying Sales Tax Reporting has changed after posting a credit memo, don’t worry. That just means the taxable amount on the invoice changed. Sage BusinessWorks will show you how the amounts split between taxable and nontaxable sales.

Review how to interpret A/R credit or debit memo sales tax reporting distribution.

Troubleshoot sales tax issues

Why isn't sales tax calculating on my invoices?

Usually, it comes down to a few settings in Accounts Receivable and Inventory Control. Here’s what to check:

• Customer setup: Make sure the customer has sales tax jurisdictions assigned in Maintain Customers. Without that, the invoice won’t be taxable
• Inventory Control users: If you're using Inventory Control, double-check if you have the part marked as taxable in Maintain Parts. If it’s not, no tax will calculate—even if the customer is taxable
• Standard Items users: You need to set the item as taxable in AR, Utilities, Standard Items. Again, if it’s not marked taxable, no tax will show up, even for taxable customers

Want more details? Refer to Sales Tax not calculating for more detailed information.

How do I get sales tax to apply to freight?

You can make freight taxable by going to AR, Utilities, Sales Taxes, Maintain, and turning on the freight tax option. Just a heads-up: this change won’t affect any quotes, orders, or invoices that you already processed before you made the update.

Sales tax Reporting

The sales Tax Report is incorrect-how can I check for errors?

If your Sales Tax Report isn’t showing the right numbers, it usually comes down to how you posted the transaction. Whether a transaction shows up as taxable or nontaxable depends on the tax settings you chose when you created the invoice. If you didn’t define any tax at all, that invoice won’t show up in the report.

Need further details? Review how to troubleshoot the Sales Tax Report for step-by-step tips.

How do I know if the invoice is taxable or nontaxable on the sales tax report?

Here’s a quick breakdown:

• Taxable invoice: You marked the invoice header as taxable and added sales tax jurisdictions in the summary screen. It’ll show up in the taxable column

• Non-taxable invoice: You left the taxable box unchecked but still added sales tax jurisdictions. It’ll show up in the nontaxable column

• Missing from the report: Don’t forget to add sales tax jurisdictions in the summary screen. Otherwise, the invoice won’t show up. This happens no matter if you marked the invoice header taxable or not