How the System Works - Sales Tax

At HomeSource, we only pay sales tax on recognized revenue. While we know some companies prefer to pay on open orders, the system supports (and calculates) paying taxes by goods that have been transferred to the customer, rather than by payment status.

Open orders can be included, but you will have to manually enter the sales tax invoice into Accounts Payable. Caution: Please note that by doing this method you are overpaying your tax liability.

Sales tax is calculated on each line item of your order, rather than on the whole order subtotal. Sometimes, this can make the total tax higher by a penny or two because each line is calculated and rounded separately.

Setting Up Your Nexus

Under POS settings, click the General tab, and scroll down to the Nexus prompt.

Add all states where taxes are collected. All state and local jurisdiction rates will be included automatically.

Under your location settings there is a place to override the Nexus information. Leave that blank unless you want to override the shipping location jurisdiction for all sales in that location.

Under each customer, your Nexus and location tax rates can be overridden. If the customer is tax exempt and has a certificate - enter that in the customer information.

You will not want to enter the tax rate in the Override tax space unless you want this customer to override the sales tax nexus.

Also, make sure the customer address is correct for the software to look up the tax rate.

If you receive a message of a tax error- edit the address and make sure the pin displays the location on Google maps.

In the inventory model section, each Model or MISC item can be marked as taxable or non-taxable.

Extended Service Contracts will be taxed the same as your product unless you change the rate of the ESC models. This can be found under POS settings, Extended Service Contracts.

Leave the rate blank for the Nexus rate to be used, otherwise enter the override rate.

In each quote, order or service request, there is an option to override the item tax under the calculator action button.

Last, the tax rate can be different if the order is a pickup. In this case, use the location of the store where its being picked up as the sales tax jurisdiction.

Sales Tax report

The Sales Tax report is found under Point-of-Sale Reports. Click the Tax tab then select your date range.

The system will display the collected amounts in summary by state and county.

Note: Anytime the Nexus is overridden, the county will show as None, as we do not look up the address. The same is true of tax-exempt customers.

To view the details, click the Sales Tax tab.

Here we show the Customer information, City ,Tax Origin and Rate.

Use Advanced Filters to filter by county or state. There are also filters for tax exempt, and different customer types, if needed.

You also can create the vendor invoice for your sales tax by clicking the Add to Invoice Button.

General Ledger Posting Information
The sales tax amounts will post to your Sales Tax Payable account when your sales and service are invoiced and completed.

The system will first look at what location the sale is posted under. Then will select the Account you have indicated for your Sales Tax Payable account. This account type should be a current liability. Any positive amount for sales tax will create a credit to this account.

Then when creating the Sales Tax invoice in Payable, the Sales Tax Payable account will be debited.