Set up sales and service taxes
Sales and service taxes in Practice CS consist of Taxing Authorities and Tax Areas. Set up both entities to apply the correct tax to client engagements and WIP transactions.
Taxing Authorities and Tax Areas
Sales and service taxes consist of 2 entities:
- A Taxing Authority is a specific municipality that charges a sales or service tax on goods and/or services.
- A Tax Area consists of one or more Taxing Authorities that define the total tax charged for goods and/or services in the locality where your firm operates.
Example:
- Taxing Authority: State of Michigan = 6.0%
- Taxing Authority: City of Detroit = 2.0%
- Tax Area: Michigan State and Detroit = 8.0% (sum of both Taxing Authorities)
- Tax Area: Michigan State = 6.0% (State of Michigan alone)
Setting up a Taxing Authority
- Go to .
- SelectAdd.
- Enter a description for theTaxing Authority.
- Enter the tax rate.
- Enter the tax type: Sales or Service Tax.
- Enter the GL account if you are exporting journal entries to a CS Accounting product.
- SelectEnter.
Setting up a Tax Area
- Go to .
- SelectAdd.
- Enter a description for theTax Area.
- Under Taxing Authority information, select each Taxing Authority to include in the new Tax Area.
- SelectEnter.
Indicating whether a client is taxable
Assign Tax Areas to engagements to specify which tax applies to work associated with that engagement. Assign a Tax Area for each taxable engagement individually, as Practice CS doesn’t support setting a client as taxable across all engagements at once. However, if a tax applies to a particular engagement for all clients, you can add it to the engagement template.
Indicating whether WIP is taxable
To mark a product or service as taxable, select whether a Sales Tax, Service Tax, or both apply to each activity. When you select a taxable activity in a time or expense transaction, Practice CS checks the associated engagement to determine which Tax Area to apply.
note
Practice CS doesn’t add the Sales or Service Tax amount to the WIP amount in the transaction. The tax appears on the invoice when you bill the WIP transaction.
