Let us take an example where we are selling an item for which all three taxes are applicable:
- In the Edit Invoice window, you will see a column for Tax Table. From the dropdown list select the VA-Fairfax-Vienna tax table. Make sure the column marked Taxable? Is checked and Tax Included? is not. You will see that the appropriate tax is calculated and applied.
- In some jurisdictions, some of the costs are not taxable. For example, in Maryland, delivery charges are not subject to sales tax. Add a separate line item for delivery charges in the invoice and uncheck the Taxable? column.
- Once you have verified all entries, make sure you Post the invoice as shown in the following screenshot:
- Showing individual tax items on the invoice: If you are required to show individual taxes separately in the invoice, you can do that in GnuCash. From the menu select Reports | Business | Printable Invoice. Select the invoice that you would like to print.
- Open the Report Options dialog using the Options toolbar button. In the Display tab you will see a checkbox Individual Taxes. Check that to see the separate tax line items displayed separately as shown in the following screenshot:
- When the time comes to pay the sales tax, you need a statement of all the sales tax collected by you during the period to attach to your sales tax return. With the VA Sales Tax account register open, from the menu select Reports | Account Report. The report will appear as shown in the following screenshot.
We were able to create sales tax tables according to the applicable law in our jurisdiction. While preparing the invoice, we were able to apply the appropriate sales tax on the line items where tax is applicable. We were able to print invoices showing the separate tax line items, if needed. At tax time, we were able to create a report to enclose with the tax return.
Note
Take a moment to read this statement. Sales taxes in the US are due and payable when the merchandise is given to the customer or when the work is performed, not when payment is made. Did that make you pause? It should have. If it didn't, I am probably flying too fast for you. I should slow down and let you catch up. If you are offering credit terms to your customers, and if you don't collect before tax payment is due, you will be paying the tax from your pocket. It is on top of the credit that you have extended to your customer, effectively delivering a double whammy on your cash flow. Other countries may have different rules.
- Can you apply more than one tax table to an invoice?
a. Yes
b. No
c. Under certain conditions