Order Entry Advanced Tax: Part 4

  • By heather-holder
  • January 16, 2018

Taxable Ship To Contact

As explained in Order Entry Basic Tax:  Part 2 in order for taxes to calculate in Order Entry the Ship To contact record must be set up as taxable.  This is separate from and in addition to the Customer Record being set as taxable. Without the Ship To contact being set as taxable, taxes will not be calculated.

In order to set up a contact as taxable navigate to Company > Users & Contacts > Contacts and select the contact you wish to modify in edit mode.  You will need to click on the Additional information tab as shown below in order to set the Taxable checkbox.  Because we are setting up advanced taxes here we will also need to link this contact up with a Contact tax group.    At the bottom right of the Additional information tab you will see a drop down for the Contact tax group.  The Contact tax group can be created here by clicking ‘Add’ or you can simply select the one that is already listed.


Ensure you save your changes before exiting the contact record.

Note: This process must be completed for every Contact who you wish to use as Ship To and have tax charged for.

Create Item Tax Groups

As we are now setting up advanced taxes we need to ensure that each of our taxable inventory items is mapped to an Item Tax Group.  In the basic tax setup procedures we learned how to set each of our inventory items as taxable but no value was required in the ‘Item tax group’ dropdown field of the Inventory Item Information.  Now that we’re using advanced tax we will need all taxable inventory items to be a member of an item tax group.

Item Tax Groups are created by clicking the Add button in Inventory Control > Setup > Items > Tax Groups.  It is recommended that your Item Tax groups be named in a meaningful way so as to make them easier to distinguish when placing items in the groups.  The input form for creating Item Tax Groups is very simple as shown below:


Assigning inventory items to tax groups enables you to apply taxes different based on each group. For example, taxation rate might change depending on the number of items purchased. In Canada for example, you are charged Goods and Services (GST) tax on the purchase of a single muffin, whereas the purchase of a dozen muffins is not charged GST tax. In this example you will want your single muffin inventory item in a separate tax group from the dozen muffin inventory item.

Next week we will use these Item Tax Groups to organize our Inventory Items for taxation purposes.

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