Trackops allows you to create as many tax rates as you need, making it easy to track the amount of tax you collect.
To create a new tax rate, click the Settings tab, click the Tax Rates link, and then click the New Tax Rate button in the upper right.
From here, add each tax component that adds up to the total tax rate. Each tax rate must contain at least one component. In its simplest form, the component can simply be the entire tax rate, such as the simple example below:
Simple Example for Colorado (USA):
|Colorado Sales Tax||7.72%|
For the most detailed results, you should research all the components that make up the total tax rate, and break them down individually, as shown in the advanced example below:
Advanced Example for Denver, CO (USA):
|Colorado State Tax||2.90%|
|Denver City Tax||3.62%|
|RTD Tax (train)||1.20%|
In some situations, you may need to work with compound tax rates, or "effective" tax rates. These are rates that are calculated on top of all other taxes. For example, if you collect tax in Quebec (Canada), you would need to track the effective rate of QST + GST, in addition to the standard federal rate (see below):
Compound (Effective) Tax Example for Quebec (Canada):
|Tax Component||Nominal Rate||Effective Rate|
In the example above, you would mark the "GST + QST" component as "compound", which would generate the proper effective rate.
Once you have configured your tax rates, you can set the default tax rate for each invoice item in your settings, as well as each item on your client price lists.
Note: If you have questions about setting up tax rates, you should contact your accountant directly. Trackops does not offer official tax advice.