Tax Setup Follow
Midnight Estimates and Orders need to be set up so that the appropriate taxes are estimated, and ultimately shown on estimates and invoices delivered to your clients. Taxing in Midnight is set up in administration, and then applied to estimates and orders based on settings in the customer record and also the service records. This article will detail the administration tax setup.
Taxing is comprised of three administrative tables
- Tax codes
- Tax jurisdictions
- Tax exemptions
The two most common tables are tax codes and tax jurisdictions. If you are in a location where both a state and a county tax are to be applied for sales to all taxable customers, you will use two tax codes, and add them both to one tax jurisdiction.
- Tax Codes
County Tax – 2.0%
State Tax – 5.0%
- Tax Jurisdiction
Harris Conty Texas – 7.0%
This setup allows for multiple different tax jurisdictions, each one ultimately being attached to the appropriate customer records.
The tax code screen is where you will enter the individual tax codes as described above. In order to set up our next county tax code we will make the following entries in the bottom row:
- Code: Tax Code abbreviation
- Description: Tax code description
- Percent: Tax Code percentage
- GLID: General Ledger ID to push tax dollars into your accounting system
- Inv Item: Invoice item code to push tax dollars into your accounting system
- Payable Account: Sales Tax Payable account set as default in your accounting system
- Service Tax: Check if the tax is to be applied to taxable services
- Postage Tax: Check if the tax is to be applied to postage
- Active: Check if the tax is currently active
Adding a new Tax Code
To add a new tax code, type in the gray column at the bottom of the tax code page.
Once all of your entries are made, click on the blue save button to save the new tax code.
Tax jurisdictions are combinations of tax codes, and since taxing can be comprised of a single tax code or multiple tax codes, we use the jurisdiction to group tax codes together and attach them to the Company and individual Customer records. Even if you operate in a location with only state sales tax, you will still need to create the single tax code, and then create a tax jurisdiction that includes that tax code.
To add a new tax jurisdiction, select Add from the drop-down list on the Tax Jurisdictions screen. Once you’ve selected Add, you will then be redirected to the Add Jurisdiction Screen, where you can enter the information and select the appropriate tax code(s) for the jurisdiction.
The fields on the tax jurisdiction screen are:
Name: The name of the tax jurisdiction
State: The two digit state abbreviation
Description: The description of the tax jurisdiction
Active: Select active if you want to be able to select this tax jurisdiction on customer records or in the company setup record
Tax Code: Select each Tax code that is a part of this Tax Jurisdiction. After selecting the codes from the drop-down list, click on the save button at the end of the row to save the tax code to the jurisdiction. Repeat this process if you need multiple tax codes.
Once the tax codes have been saved to the tax jurisdiction, you can click on Save and Close to return to the Tax Jurisdiction selection screen.
To edit an existing tax jurisdiction, you will select it from that Tax Jurisdiction selection screen, and it will load into the same form you used to create the tax jurisdiction. From there you will be able to change any of the fields you entered, add new tax codes to the jurisdiction, or delete tax codes you might have added in error.
Note that Tax Exemptions can be used to exclude services from being taxed by a particular tax code.
Default Tax Jurisdiction
In order to make sure that taxes are appropriately charged on estimates and orders when necessary, the tax jurisdiction you create needs to be first set as the default tax jurisdiction on the company setup record. While there can be multiple tax jurisdictions for your different customers in different regions, states, counties, this will be your default tax jurisdiction that applies to the majority of your customers.
To enter the default Tax Jurisdiction screen, select the Global Settings tab in the Admin Settings menu, and click on the Tax Jurisdiction drop down. Once you have selected a default Tax Jurisdiction, click the Save button to make your changes.
Tax Jurisdiction Customer setup
In the case that you have customers to whom a different tax rate (requiring the different tax jurisdiction) should be applied, then you will need to attach that different tax jurisdiction to that customer’s record. To do that, you will access the customer record, and then select the appropriate tax jurisdiction for that customer.
Note that if the customer is set to taxable, and there is nothing in the Tax Jurisdiction field for a customer
record, estimates and orders will be taxed according to the company setup level tax jurisdiction.
Tax Exemptions can be used to exclude services from being taxed by a particular tax code. For more
details and help in setting up, please contact Support.