Tax Rates allow you to apply different tax rates to items that you, as an admin, invoice to your customers. Tax rates are added and configured under Settings/Billing/Tax Rates. You can Add, Edit and Delete tax rates and each tax rate may have several components.
You add a tax rate by clicking the Add tax rate button on the right-hand side of the page. You can specify:
- Name (required) - The name of the tax rate.
- Rate (required) - Percent rate which will be applied to the items.
- Components (required) - Each tax component needs to have a Name and Rate of its own. All tax components can be listed on an invoice.
Tax rates can be applied on a few levels:
- Global tax rate - You can apply a global tax rate for your organization by navigating to Settings/Invoicing and selecting a default tax rate to be applied to all products and customers.
- Company or member tax rate - You can apply a tax rate on a company or member level by editing the company Billing Details and setting a default tax rate for the company. This tax rate will then be applied to all purchases that don't have a specific tax rate associated with them.
- Product tax rate - You can apply a tax rate on an account level by editing the accounts under Billing/Accounts. As each billing plan is associated with a revenue account, applying a tax rate on the account will apply it to all invoiced products based on the billing plan.
IMPORTANT: When a new invoice is created, the system first checks the targeted company tax settings. If there is a tax applied on the company, the system uses that value in the invoice. If the company doesn't have a tax applied, the system looks up the tax applied on the invoice line items' accounts. If the accounts also don't have a specific tax applied, the system falls back to the global tax setting under Settings/Billing.