How to Set Up and Process Sales Tax?

The Accounts Payable module, in conjunction with Library Master, allows you to set up and process sales tax with complete flexibility. You can maintain and track an unlimited number of tax jurisdictions, process tax-on-tax calculations, set up nonrecoverable percentages, allocate tax to vendor or item expense accounts, and create a structure to tax items at different rates within tax jurisdictions. The Sales Tax Class Maintenance, Sales Tax Code Maintenance, and Sales Tax Schedule Maintenance options on the Library Master Common menu are shared by all companies, which allows the tax structure to be shared by multiple companies. Sales tax account maintenance, and all processing and reporting, is performed for each individual company.

NOTE It is important that you understand the use of nonrecoverable percentages before you set up your sales tax.
The setup of sales tax consists of the following four-part process:

· Sales Tax Class Setup: The tax class is used to define tax classifications. These tax classes are then assigned to each inventory item and miscellaneous charge code. A tax class can also be assigned to each vendor.

· Sales Tax Code Setup: The tax code is used to define whether or not a tax class is taxable. It is also used to define a tax rate, if applicable.

· Sales Tax Schedule Setup: A tax schedule groups individual tax codes.

· Sales Tax Schedule Assignment: Tax schedules are assigned to each vendor, based on the vendor's location or purchase address.