Add Account / Tax classes

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This option allows you to create and maintain account / tax classes. Tax classes are a set of five (5) accounts which are linked to the Ledger tab of the Action → Inventory screen for a selected inventory item.

When a inventory item is linked to a tax class, it will disable the Lookup button on the Ledger tab of the Action → Inventory screen for a selected inventory item. It will automatically set the Input and Output Tax, Sales, Cost of sales and Inventory control account fields without having to select them for each inventory item.    

To set Inventory Tax classes:

1.On the Setup ribbon, select Inventory information. TheInventory  information screen will be displayed.

2.Click on the Tax classes tab.

3.Enter the Name  (description) for the tax class.

4.Select the following accounts:

a)Input Tax - Select the Input Tax account.

If you are not registered for VAT/GST/Sales Tax, you may leave the Input Tax accounts blank.

You may activate the Use default tax - Inventory file override settings on the Action →Vendor  (Accounting information tab) for a vendor account, and select a different VAT/GST/Sales Tax account or code on the Tax lookup facility for that vendor.

When purchase documents or supplier returns documents for the vendor is updated (posted) to the ledger, the selected Input Tax account for this Inventory item will be ignored and the purchase transaction will be updated (posted) to the specified Input Tax account for the vendor.

b)Output Tax - Select the Output Tax account.

If you are not registered for VAT/GST/Sales Tax, you may leave the Output Tax accounts blank.

You may activate the Use default tax - Inventory file override settings on the Action →Customer  (Accounting information tab) for a customer account, and select a different VAT/GST/Sales Tax account or code on the Tax lookup facility for that customer.

When invoices or credit notes for the customer is updated (posted) to the ledger, the selected Input Tax account for this Inventory item will be ignored and the purchase transaction will be updated (posted) to the specified Input Tax account for the customer.

c)Sales - Select the Sales account.

If you have more than one Sales account, or use Sub-accounts, you may select the applicable Account or Sub-account for each of your Inventory items.

d)Cost of sales - Select the Cost of sales account.

If you have more than one Cost of sales account, or use Sub-accounts, you may select the applicable Account or Sub-account for each of your Inventory items.

e)Inventory control - Select the Inventory control account.                

5.Click on the OK button to save the Tax class.

6.Go to the Inventory items and select a inventory item from the list.

7.Click on the Ledger tab of the selected inventory item and select the Tax class from the list.

8.All the accounts linked to the Tax classes tab - Setup → Inventory information will be linked to the applicable account fields on the Ledger tab of the selected inventory item.

Once you have created Tax classes, and selected a Tax class from the list on the Ledger tab of inventory items, you may change them and click on the Apply to All button. This will update all inventory items with the new accounts selected (changed) for the each inventory item linked to the Tax class.

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