Tax Rates

Tax Rates allow you to define and manage the percentage values used to calculate taxes on invoices and quotes. These tax rates are applied at the line item level, offering flexibility and precision in how you charge taxes to your clients.

Location:
System > Configuration > Tax Rates

Creating and Managing Tax Rates

1. Navigate to the Tax Rates Page
   Go to System > Configuration > Tax Rates to view a list of your current tax rates. From this screen, you can:

   • View existing tax rates along with their percentage and settings.
   • Edit or delete an existing tax rate by using the Options menu.

2. Add a New Tax Rate
   Click the New button to open the New Tax Rate form. Fill in the required information:

   • Tax Rate Name:
     Provide a descriptive name for the tax (e.g., “Sales Tax” or “GST”).

   • Tax Rate Percent:
     Enter the tax percentage as a numeric value. For example, entering 5 creates a 5% tax rate.

   • Calculate as VAT/GST:

     • Yes: The tax is considered included in the item’s price. In other words, the displayed item total already contains the tax amount.
     • No: The tax is added on top of the item’s subtotal.

   • Compound:
     If set to Yes, this tax rate is applied to the subtotal plus any previously calculated tax. This is often used in regions where a second level of tax is charged on top of another tax.
     Note: Compound tax rates must be applied as a second tax field (i.e., Tax 2) at the line item level for the compound effect to take place.

   3. When finished, click Save to store the new tax rate.

Applying Tax Rates to Items

FusionInvoice supports up to two tax fields per line item. Once tax rates are configured:

• On Invoices and Quotes:
  When adding or editing a line item on an invoice or quote, you can select from the defined tax rates. If two tax fields are enabled in your System Settings, you can apply one tax as “Tax 1” and another as “Tax 2” (if needed, such as for compound taxes).

• Calculations and Totals:
  When you select a tax rate for an item, the tax amount is automatically calculated and included in the line item’s total. If a compound tax rate is used as Tax 2, it will be calculated based on the subtotal plus the amount of Tax 1.

Best Practices

• Consistent Naming:
  Use clear, descriptive names for your tax rates so it’s obvious which region or purpose they serve.

• Test Your Calculations:
  Before sending invoices or quotes, review calculations to ensure the tax amounts are correct, especially when using compound or VAT/GST-inclusive taxes.

• Stay Compliant:
  Keep tax rates up to date with current laws and regulations in your area. Update or create new tax rates as necessary.