Setting up a Tax Agency
Most taxes are paid to a local authority: county, state, province, or federal. Each of these will have a tax agency that takes in taxes you have collected, and these are normally used in your accounting system. EMDECS one will track which taxes go to which agency so that they will be used automatically when exported by the system or by your accountant.
To set up a tax agency, begin by selecting the EMDECS one Settings which are underneath the gear icon in the upper right-hand corner of your screen. This will open the Settings screen as shown here:
Next, select the Tax Setup option under Your Preferences. This will show you the list of taxes already set up in the system (if any):
Then click the Add Tax Agency button to get a blank form where you'll fill in the necessary details:
There are two mandatory pieces of information you'll need to supply:
- The tax agency's Name (e.g., Internal Revenue Service)
- The Tax Number that agency assigned to your business
Once you've entered these, click the Add Tax Agency button and Maui will set up the new agency for you. It will then be shown in the main Tax Setup screen.
Setting up a Tax
After a tax agency is set up, you can create any taxes that you collect which get paid to that agency. Click the Add Tax button and you'll be shown a blank form to enter in the information EMDECS one will use to calculate it for you:
You'll need to enter these pieces of information:
- The Name of the tax (a short form of the name of the tax)
- A Display Name (the longer form of the name, so it is easier to look up and identify when applying it).
- The Tax Agency that you pay this tax to. Note that if the "tax" is actually a surcharge that you do not have to remit (for example, if you add a percentage to the invoice for credit card fees and then keep that yourself), you do not have to select and agency.
- The Type of the tax. This is whether the tax is calculated as a percentage or is a flat fee that applies no matter what the other charges on an invoice .
- For percentage taxes you will also have to enter the appropriate percentage in the rate field.
- For flat taxes you will also have to enter the flat fee that is charged for this tax into the rate field.
- The Effective Date of the tax. As you can't charge new taxes on invoices generated in the past, this will usually be today's date. However, you can also put a future date if you'd like to set up a tax sometime before it comes into effect. If you do this, the tax will not be charged until midnight (00:00) of that day.
You'll also need to tell EMDECS one how you'd like it to use the tax:
Default taxes are ones which EMDECS one will calculate and add to invoices and estimates automatically. If you turn this off, it will not be added automatically. You can then decide whether to add it or not on an invoice by invoice basis.
Compound taxes act a bit differently from most other taxes. If a tax is compound it doesn't just apply to the base total of the invoice, but also on any other taxes that are charged first.
Example: Several Canadian provinces collect two taxes, PST and GST. GST is a compound tax while PST is not, so Maui calculates the taxes on the invoice by first multiplying the PST percentage with the base total of the invoice. It then adds the PST amount to the base total, and only then does it apply the GST to the new total. In other words, there's a little extra GST paid on the previous tax as well as the base total of the invoice because GST is compound.
When you are done, click the Add Tax button and EMDECS one will set up your new tax. It will then show in the Taxes table on the main Tax Setup screen.
Editing Tax Preferences
Once you've created a tax you have the option of editing some further details if needed. Click on the name of the tax in the Taxes table and a new set of options labelled Tax Preferences will be shown:
Tax Preferences Table
This table shows all of the entities in EMDECS one that can have taxes and surcharges applied to them, for example work orders or estimates.
For each of these entities you can change the way the tax works when applied to a work order invoice or estimate. The tax can apply to the whole thing, or to just the labour items, or just to the parts items. If you create a new tax and then don't come in here to make changes, the tax will be applied to the whole invoice or estimate.