Tax Settings
The Tax settings page allows you to set up and manage your sales taxes, non-sales taxes, tax groups, and tax identification numbers. Fiskl's flexible tax system supports multiple tax agencies in various currencies, accommodating single tax rates, multiple tax rates, and compound taxes.
Access Tax settings using the gear icon on the top left menu or visit the Manage taxes page on the web dashboard.
When you create a new Tax Number / Tax ID a new Ledger Account is automatically created in the Chart of Accounts
TL;DR - Watch a walkthrough of the Tax Settings
Tax Configuration
The Manage taxes screen consists of three main sections:
1. Single Taxes
In this section, you can:
- View a list of all your taxes and their assigned tax numbers
- Add new taxes and assign them to a
Tax ID - Designate taxes as either Sales or Non-Sales taxes
- Assign multiple taxes to a single Tax ID
The currency of the tax is determined by the associated Tax ID.
For example when creating French VAT tax, you would apply for a French VAT number and assign the appropriate VAT rate to that EUR Tax ID.
2. Tax Groups
Tax groups allow you to:
- Create collections of two or more taxes
- Set up compound (stacked) taxes
Example of a tax group
In British Columbia, the sales tax group includes both the Goods and Services Tax (GST) and the Provincial Sales Tax (PST). These are applied together on sales transactions, with each tax having its own rate and rules but grouped for calculation and reporting purposes.
An example of a tax group with three taxes:
Tax Code A: 5% sales tax
Tax Code B: 6% regional tax
Tax Code C: 4% municipal tax
Let's say you purchase an item for $100. Here's how the non-compound tax group would be calculated:
Tax Code A (5% sales tax):
$100 × 0.05 = $5.00
Tax Code B (6% regional tax):
$100 × 0.06 = $6.00
Tax Code C (4% municipal tax):
$100 × 0.04 = $4.00
Total taxes: $5.00 + $6.00 + $4.00 = $15.00
Example of a compound tax group
In Quebec, Canada, the tax structure includes both the federal Goods and Services Tax (GST) and the provincial Quebec Sales Tax (QST).
GST (Goods and Services Tax):
This is a federal tax applied across Canada.
The GST rate is 5%.
QST (Quebec Sales Tax):
This is a provincial tax specific to Quebec.
The QST rate is 9.975%.
QST is calculated on the selling price plus GST.
Base Price of an Item: $100
GST Calculation: $100 × 0.05 = $5.00
QST Calculation: ($100 + $5) × 0.09975 = $10.47
Total taxes: $5.00 (GST) + $10.47 (QST) = $15.47
Final price of the item: $100 + $15.47 = $115.47
3. Tax ID/VAT Numbers
In this section, you can manage your Tax IDs (also referred to as Tax Agency numbers or Tax Number). Each Tax ID is associated with:
- Country
- Currency
- Specific taxes
Each Tax Number is linked to a corresponding Liability Ledger Account with a matching name. All transactions involving taxes associated with that Tax Number will be automatically recorded as journal entries in this Ledger Account. When you create a new Tax Number, a corresponding Ledger Account will automatically be created in the Chart of Accounts. If you rename a Tax Number, the corresponding Ledger Account will also be renamed.
Setting up Taxes
Follow these steps to set up your taxes:
- Navigate to the Tax settings page
- Choose the appropriate tab (Single taxes, Tax groups, or Tax ID/VAT numbers)
- Click the "Add" button to create a new entry
- Fill in the required information
- Save your changes
Remember: Regularly review and update your tax settings to ensure compliance with changing tax regulations in your jurisdiction(s). Consult with a tax professional if you're unsure about specific tax requirements for your business.