Last week we learned about Accounts Receivable account labels and how to turn them on. Accounts Receivable account labels are similar to Accounts Payable account labels but they differ in the way that they relate to taxes. In Accounts Receivables the account labels can be used for displaying taxes on invoices.
Last week’s blog post talked about how to turn on AR account labels. Once AR account labels are turned on in Accounts Receivable > All > Setup > Configuration two additional checkboxes related to taxes will appear in the Configuration screen as shown below:
The first option, Display tax and subtotals fields for invoices, should be checked if you want to have the system display tax and subtotals on your invoices. The second option, Enable tax schedules, is used to implement an advanced sales tax structure which automatically calculates the taxes based on the customer who placed the order and each item on the invoice. If you won’t be setting up advanced tax auto calculation, you won’t need to enable tax schedules. For now we will only select the top option but when we delve into advanced taxes, we will enable the tax schedules.
Tax Line Account Labels
The next step to setting up the tax lines on your invoice using account labels is to create the tax account labels themselves. To do this go into Accounts Receivable > Setup > Account Labels > Add. In our example we will make one for Ontario HST as shown below. Please note that we have turned on Subtotal and Is Tax by placing check marks in their boxes. Please note that once your account label is saved you will be unable to change the AR Account Label.
The Account label tax group dropdown is only relevant when doing advanced taxes, so we will leave it blank in this instance. Also important to note is that the Account label tax group dropdown can only be used if the account label in question isn’t a subtotal.
Once you are happy with your settings click Save.