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Setup

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

  1. Go to
    Setup
    Taxes
    Taxing Authorities
    .
  2. Select
    Add
    .
  3. Enter a description for the
    Taxing Authority
    .
  4. Enter the tax rate.
  5. Enter the tax type: Sales or Service Tax.
  6. Enter the GL account if you are exporting journal entries to a CS Accounting product.
  7. Select
    Enter
    .

Setting up a Tax Area

  1. Go to
    Setup
    Taxes
    Tax Areas
    .
  2. Select
    Add
    .
  3. Enter a description for the
    Tax Area
    .
  4. Under Taxing Authority information, select each Taxing Authority to include in the new Tax Area.
  5. Select
    Enter
    .

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.

This article applies to:

  • Product: Practice CS
  • Subject: Setup