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Microsoft Dynamics Sales Tax Setup Overview (video)

  

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This is a high level overview of how Sales Tax is setup and works in Microsoft Dynamics GP.

Sales Taxes calculations are made based on:

1. The item being sold,  is it setup as Taxable, non-taxable or is tax determined based on whether or not the customer it taxable?
2. Is the Customer Taxable or non-taxable?
3. How is the item being received, by delivery or is the customer picking the item up?

Let’s start with step 1 above.  Is the Item taxable?

If it is not taxable, then it’s easy, no tax is calculated even if the customer is taxable.

If the item is taxable, we need to know what taxes to charge, either specifying a specific tax schedule (and what is that tax schedule) or charge taxes based on the customer?

Let’s review step 2 above.  Is the Customer Taxable?

After reviewing step number one we see why this is important.  If the item is setup to base tax calculations on the customer, we need to know if the customer is taxable and if they are taxable which tax schedule should be used when selling items to them.

Finally step 3 from above.  Is the item going to be Picked Up or Delivered?

If the item is going to be delivered to the customer, AND the tax is based on the customer, AND the customer is taxable, we charge based on the tax schedule for the customer.

If the item is going to be delivered to the customer, AND the tax was setup with the item, we charge based on the tax details that are common in both the Item tax schedule AND the customer’s tax schedule.

If the item is going to be picked up by the customer, AND the tax is based on the customer, AND the customer is taxable, we charge based on the tax schedule defined in our Company Setup.

If the item is going to be picked up by the customer, AND the tax was setup with the item, we charge based on the tax details that are common in both the Item tax schedule AND the tax schedule defined in our Company Setup.

As with all aspects of Microsoft Dynamics GP, or any other Accounting or Enterprise Resource Planning (ERP) system, the more detail you in the system, the better the reporting will be.  This is all about making that monthly or quarterly sales tax report easier to prepare.  Once GP is setup correctly, your life will be easier!