Applying taxes on a sales order

Taxes are fees (usually a percentage of the order total) that must be paid to the government or other authorities. The system can calculate taxes automatically based on your location, the product type, and the customer's tax status.

Before you start

• The sales order must exist with at least one line item.
• Your administrator must have set up tax rates for your company.
• You should know whether the customer is tax-exempt or subject to standard tax rates.
• Some products may be tax-exempt (like medical supplies or food in certain countries); check your product setup.

Steps

1. Open the sales order you want to apply tax to. Open in Usystems

2. Scroll down to the Taxes section, usually near the order totals.

3. If taxes are not already shown, look for an Add Tax button or a Tax Rate dropdown.

4. Click the Tax field or dropdown and select a tax rate:

   • Standard Rate (e.g., "VAT 10%" or "Sales Tax 5%")
   • Reduced Rate (if your location has multiple rates for different product types)
   • Tax-Exempt (if the customer does not owe tax)

5. The system calculates the tax amount automatically. For example, if the order total is 1,000 and the tax rate is 10%, the tax is 100, and the new total is 1,100.

6. Review the order total including tax at the bottom.

7. Click Save to apply the tax.

Accounting impact

When the order is converted to an invoice, the tax is recorded separately:

• The net amount (before tax) goes to the revenue account.
• The tax amount goes to a tax payable account (a liability).

You will need to remit this collected tax to the government, which your accounting department tracks.

Tips & common mistakes

• Tax is calculated on the final amount, which includes the subtotal minus any discounts.
• You can only apply one tax rate per order. If you need to charge different rates on different lines, apply the overall rate that matches most of the order and adjust the rest manually if needed.
• Some customers are tax-exempt: if the customer is a government agency, NGO, or reseller, they may not owe tax. Check the customer record or ask.
• Tax-exempt does not mean free: it means the customer does not pay tax, but they may still owe the base price.
• The tax rate is locked in when you convert the order to an invoice. If tax rates change later, they do not affect orders created before the change.