You must define the appropriate tax codes before you can enter orders with applicable sales taxes. Do the following to define tax codes:
- Go to Settings > Finance > Tax codes.
- Select Add new tax code.
- Enter a Code for the tax. When defining state or province tax codes, use the standard two-character postal abbreviation for the state or province.
- Enter a full Name for the tax code.
- Enter the percentage Rate you are assigning to the tax code. Make sure to enter the rate as a percentage and not as a decimal. For example, enter 8.25 (not .0825) for a tax rate of 8.25%.
- (optional) Select the Account to associate with the tax code. If you leave the Account field blank, iMIS records the value selected for the Sales tax on the Default Accounts tab. See Default Accounts for more information.
- (optional) Enter any applicable Related tax. These fields allow you to piggyback (use multiple) one or two additional tax codes. A city tax may always be associated with a county and a state tax. These tax codes must always be set up in distinct accounts so that the taxes can be tracked separately but calculated for the customer as a single amount.
- (VAT taxation only) Select a Tax category and VAT country if the default organization's Tax method is set to VAT.
- Select the Tax category to be applied in conjunction with this Tax code. The Tax category specifies the taxation rules to be applied.
- Select a VAT country that this Tax code will be applied to.
- (Canadian taxation only) Enable 1st related tax is taxable to make the first Related tax field taxable.
- Click Save.
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Only one tax code can exist for each unique Tax category and VAT country combination, for example, there is only one tax code which defines the Standard (Tax category) tax rate for the United Kingdom (VAT country). When a product or function is marked as Tax based on customer location, the Tax category of the product and the VAT country of the customer is used to look up the relevant Tax code.