Tax on a sale or a purchase
Choose a tax rate on a line, type amounts with tax included, and see where the tax is recorded.
Tax goes on a line of a transaction. On an invoice or a deposit it is for a sale, and on a bill or a withdrawal it is for a purchase. Sales tax must be turned on first (see Turn on sales tax).
Choose a rate
When a line's account is an income or an expense account, the line has a Tax field. Press it and choose a rate. Tax amount appears under it, worked out from the Amount before tax. Press it to type a different amount. The total at the top adds them up.
The list shows the rates that are active on the transaction's date. A group rate such as GST/PST BC charges each of its taxes on the one line. Leave Out of scope for no tax. Choose Zero-rated or Exempt when no tax is charged but the sale or purchase still has to be reported. The Tax Summary lists them with no tax, and puts exempt amounts in their own columns.
Some things you sell may be exempt where you are. In Texas, for example, bakery items sold without plates or utensils and not heated carry no sales tax. Choose Exempt on those lines so the Tax Summary still reports the sale. Check the rules of your own state.
Type amounts with tax included
If a figure, such as a receipt's total, already includes the tax, turn on Tax-inclusive amounts at the top of the form before you type the amount. TrueSum takes the tax out of it. For example, $105.00 with GST (5%) is $100.00 and $5.00 of tax. The switch only changes what you type. What is saved is the same.
Where the tax goes
TrueSum decides whether a line is a sale or a purchase. Income is a sale. An expense is a purchase. An invoice is always a sale and a bill always a purchase. The rate that applies is the rate on sales or the rate on purchases, which are usually the same.
- A sale adds the tax to an account named like GST Collected (Canada Revenue Agency). It is tax you owe.
- A purchase adds the tax to an account named like GST Receivable (Canada Revenue Agency). It is tax the agency owes you.
Tax you cannot claim back from the agency, such as PST in British Columbia, stays part of the expense. In the United States all sales tax you pay on purchases stays in the expense, because you set the rate to claim nothing back (see Tax rates and agencies). A $480.00 software plan with GST/PST BC puts $24.00 of GST in GST Receivable and $33.60 of PST in the expense, which becomes $513.60.
See how much tax you owe adds these up.