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Collect Sales Tax on Markup Only

Certain types of businesses may wish to collect sales tax on the markup or profit of goods if the business already paid sales tax on that item, such as in a Use Tax situation.  Currently, there isn't an preference to automatically perform this option, but there is a way to perform this by using two additional items on sales transactions.
 
NOTE:  This workaround will display the Markup on sales transactions.  If that is not something that is desired, consider using Group Items to combine Cost and Markup
Detailed instructions
To Setup Items to collect Sales tax on Markup:
  1. Ensure the items are Non-Taxable
    1. From the Lists menu>select Item List.
    2. Double click on the items that are used for purchase transactions.
    3. In the Tax Code drop-down, select a tax code that is not taxable.
    4. Click OK
  2. Create a Markup Item
    1. From the Lists menu>select Item List.
    2. Click the Item button at the bottom of the list.
    3. Select New.
    4. From the Type drop-down, select Other Charge.
    5. Enter the Name and Description of the item as desired.
    6. Enter the rate of the Markup in the Amount or % field.
    7. Ensure the Tax Code dropdown has a taxable tax code entered.
    8. Enter the income account to track the markup item to in the Account field.
    9. Click OK.
  3. Create a Subtotal Item.
    1. From the Lists menu>select Item List.
    2. Click the Item button at the bottom of the list.
    3. Select New.
    4. From the Type drop-down, select Subtotal.
    5. Enter the Name of the item as desired.
    6. Click OK.
To Collect Sales Tax on Markup:
  1. On a sales transaction, enter the items for sale as normal
  2. Enter the Subtotal item to add up all of the item totals above it.
  3. Enter the Other charge item.
  4. Enter other items on the sales transactions as necessary
The Subtotal item will add up the cost of the material items above it and the Other Charge item will calculate the markup based on the subtotal amount.  Since the Other Charge item is the only item marked taxable, the tax amount will be calculated based only on the markup item.

                     

 

KB ID# HOW12992
12/6/2016 6:05:25 AM
PPRDQSSWS407 9138 Pro 2017 d6dfc1