Quick Guide to Setting up Taxes

In order to properly utilize the Tax Module, you first need to understand a little bit of tax terminology, as well as understand the specific sales tax laws relevant to the geographical jurisdictions (states, cities, and counties) in which your business operates.


Tax Terminology

Tax Class: A tax class, or category, is applied to your products and used to categorize them for tax purposes. All items in your product catalog should have a tax class assigned so that, in conjunction with the Tax Jurisdictions and Tax Groups, an accurate tax sales report can be created. 

Examples of Tax Classes: Packaged Food, Prepared Food, Non-Food.


Tax Jurisdictions: A tax jurisdiction is a geographic location for which you need to report taxes, which could be a state, city, county, or other defined area. A jurisdiction contains all of the tax classes and their respective tax percentages that you are required to pay for each.

Examples of Tax Jurisdictions: Texas, California, San Antonio, Houston, Bexar County, etc.


Tax Groups: Your tax classes and jurisdictions are grouped together in Tax Groups, which are assigned to Locations. A Tax Group can hold one or many jurisdictions, which can hold one or many tax classes detailing the tax percentages charged in each jurisdiction.

By assigning tax groups to Locations, you can keep track of how much tax is paid for each product depending on the geographic location in which it is sold.



Setting Up Tax Groups and their Products

1. You can go to Settings > Tax Classes, then click New Tax Class. Enter the name desired for your tax class (typically describing the type of product taxed), and click Save Changes. You can create as many Tax Classes as needed.


2. Once the Tax Classes are created, you can start adding products to these groups by navigating to Settings > Warehouse > Products, which details all of your active products in your catalog. Note that there is a column listing the Tax Classes to which a product is assigned.



You can update the tax for products in bulk using the Bulk Edit option from the Options menu. You can do so by selecting a Family of products to change and then clicking Bulk Edit. All products to be affected by the change will be marked with an orange . Clicking Save at the top right will enact these changes.

You can also change the Tax Class for an individual product by clicking the Edit icon to access the Product Edit screen. Below the product image will be a dropdown listing the available Tax Classes. After selecting the appropriate class, don’t forget to Save Changes.


Creating Tax Groups and Tax Jurisdictions


Go to Settings > Tax Groups, then click New Tax Group


Before diving into technical details, let’s take a look at a real-life example scenario that will dictate how you can break down and approach Tax Groups and Jurisdictions.


Let’s say you have 3 Tax Classes in your business:

  • Non-Food

  • Packaged Food

  • Prepared Food


You operate in two cities, San Antonio and Austin. You also operate in two counties: Bexar County and Austin County, both located in the state of Texas.


You pay 9.0% total in sales tax for products categorized as Non-Food in the city of San Antonio, inside Bexar County. The 9.0% is broken down as follows:

  • You pay 6.0% to the state of Texas

  • You pay 2.0% to the city of San Antonio

  • You pay 1.0% to Bexar County


On the other hand you pay 11% total in taxes for the same class Non-Food in the city of Austin, inside Austin County. The 10% is broken down as follows:

  • You pay 6.0% to the state of Texas

  • You pay 3.0% to the city of Austin

  • You pay 2.0% to Austin County


Back at the Tax Groups screen, let’s start by creating a new Tax Group and naming it “Bexar County Group” for Non-Food products in Bexar County in San Antonio.


 You can create your first jurisdiction for the state of Texas by clicking on +Add Tax Jurisdiction. Enter “Texas” for the name and click OK. 


After it is confirmed as created, the jurisdiction Texas is selected, and you can click on +Add Tax Class to add a class to this jurisdiction.

In the following pop-up, you can select Non-food from the respective drop-down. Enter 6.0% in the sales tax field for either Vending, OCS, or Micro Market, depending on which is applicable. 


Following the same process, you can create two new jurisdictions, one for the city of San Antonio and one for Bexar county, with their sales taxes of 2.0% and 1.0%, respectively. 


Make sure to save changes, and then follow the steps outlined above to create a new Tax Group for “Austin County Group” that corresponds to the tax scenario outlined.


As you are creating a new Tax Group, notice that you can reuse the Tax Jurisdictions created previously; in this case, the Texas jurisdiction can be re-selected, and the Tax Class and tax percentage will auto-populate for you. It’s worth mentioning that if you edit this percentage here, then it will also affect any other Tax Group using the Texas Jurisdiction.


You should now have two Tax Groups made, Bexar County and Austin County. You can edit them at any time by clicking the icon on the right of the list.


Let’s edit the Bexar County Group to enter the other two Tax Classes, Prepared Food and Packaged Food, which are broken down as follows:


Prepared Food

You pay 5.0% in sales tax for products categorized as Prepared Food in the city of San Antonio, inside Bexar County. The 5.0% is broken down as follows:

  • You pay 2.5% to the state of Texas

  • You pay 1.5% to the city of San Antonio

  • You pay 1.0% to Bexar County


On the other hand you pay 7% in taxes for the same class Prepared Food in the city of Austin, inside Austin County. The 7% is broken down as follows:

  • You pay 2.5% to the state of Texas

  • You pay 2.5% to the city of Austin

  • You pay 2.0% to Austin County


Packaged Food

You pay 8.0% in sales tax for products categorized as Packaged Food in the city of San Antonio, inside Bexar County. The 8.0% is broken down as follows:

  • You pay 4% to the state of Texas

  • You pay 2.5% to the city of San Antonio

  • You pay 1.5% to Bexar County


You also pay 8.0% in taxes for the same class Packaged Food in the city of Austin, inside Austin County. The 7% is broken down the same as the example above.

  • You pay 4% to the state of Texas

  • You pay 2.5% to the city of Austin

  • You pay 1.5% to Austin County


You don’t need to add any new jurisdictions; you can simply add the two missing Tax Classes to each existing jurisdiction.

Once built out, your complete Bexar County Tax Group should have:

  • The Texas jurisdiction, with the following tax classes:
    - Non-Food 6%
    - Packaged Food 4%
    -Prepared Food 2.5%
  • The San Antonio jurisdiction, with:
    - Non-Food 2%
    - Packaged Food 2.5%
    - Prepared Food 1.5%
  • The Bexar County jurisdiction, with:
    - Non-Food 1%
    - Packaged Food 1.5%
    - Prepared Food 1%

And your Austin County Tax Group should have:

  • The Texas jurisdiction, with the following tax classes:
    - Non-Food 6%
    - Packaged Food 4%
    -Prepared Food 2.5%
  • The Austin jurisdiction, with:
    - Non-Food 3%
    - Packaged Food 2.5%
    - Prepared Food 2.5%
  • The Austin County jurisdiction, with:
    - Non-Food 2%
    - Packaged Food 1.5%
    - Prepared Food 2%

Note: If you have additional modules in your settings, such as OCS or Micro Markets, there will be separate designated tax fields that may or may not appear in your tax fields.

Assigning Tax Groups to Locations

Finally, you can assign your new Tax Groups to the correct locations in your business, done from the Tax Groups screen.

Section 1 lists all the locations assigned to a Tax Group, while Section 2 lists all other locations not currently assigned to any Tax Group.


You can assign a location to a Tax Group by pressing the green  to the left of the location names, which will move that location from Section 2 to Section 1. If needed, you can also filter through the locations by name or geographical area.


To edit a location’s Tax Group assignment, you can do so by going to the Location’s Edit Page from Settings. The Tax Group dropdown allows you to reassign the location, and then clicking Save Changes afterward will apply the change.

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