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Set up Accounting Seed (AS) Native Tax

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Overview 

Accounting Seed (AS) Native Tax functionality is different depending upon whether your (org) organization has enabled Header Level Posting (HLP) or Line Level Posting (LLP). This means the setup is different based upon using Header Level Posting (HLP) or Line Level Posting (LLP). View the Posting Settings screen to determine if Header Level Post (HLP) or Line Level Post (LLP) is currently selected for your org.

If you are using AS Native Tax as your tax methodology, the Accounting Seed Native Tax option must be selected on the Tax Settings screen as the Tax Settings Method. The Tax Settings screen includes a Tax Setting Name field, which allows you to create more than one Tax Setting Name for AS Native Tax. For example, you might want to include a different Tax Setting Name for each Ledger.

Do you want to view information for:

Header Level Posting (HLP)

Under AS Native Tax HLP, a Tax Group provides the ability to calculate tax amounts at a line level instead of a summary tax total. The tax calculation will be performed on a Billing Line, a Payable Line, or an Opportunity Product Line record. A Tax Group can be created and selected for line level tax calculation. Each Tax Group can contain up to five Tax Rates. For example, you might have a Tax Group that includes a Tax Rate for your State tax percentage and a different Tax Rate for your County tax percentage. Both Tax Rates could be included in the same Tax Group, which will provide a Combined Tax Rate for the Tax Group. 

Note: The ability to create Tax Groups is only available when Billing Header Level Posting or Payable Header Level Posting is enabled. Also, Tax Groups are only applicable to Accounting Seed (AS) Native Tax. Tax Groups are not applicable when using Avalara's AvaTax. 

Do you want to:

Benefits of using the Tax Group feature include:

  • The Tax Amount will be calculated at the line level
  • Tax can be recorded to different GL Accounts within a Tax Group
  • Tax Groups can combine Tax Rates from multiple jurisdictions. For example, State, County, and Local tax can be included in the same Tax Group.  
  • A Tax Group can be selected as the default Tax Group on a Product. When the Product is selected on a Billing Line or Payable Line, the default Tax Group will pre-populate. If a Product does not have a default Tax Group, the Tax Rate for the line will be calculated based upon the selected Tax Group. 

For each Billing Line, a credit transaction will be created for each unique combination of the following dimensions:

  • Sales Tax Liability GL Account on the underlying Tax Rate record for the Tax Group of the selected Billing Line
  • GL Variable 1-4
  • Time Card Variable 1-2.

For each Payable Line, there will be a debit transaction for each unique combination of the following dimensions:

  • Purchase Tax Expense GL Account on the underlying Tax Rate record for the Tax Group of the selected Payable Line
  • GL Variable 1-4.

Sample Tax Group  

In the sample table below, the Combined Tax Rate on this Tax Group is 10.5%. If this Tax Group was selected as the group for a Billing Line or Payable Line, the tax amount will be calculated based upon the Combined Tax Rate for this group, which is 10.5%.

Tax Rate Name MD State Tax Kent County Tax
Tax Rate 6.00% 4.5%
Combined Tax Rate 10.5%

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Set up a Tax Group

  1. Navigate to Accounting Home and click the Setup tab. Then, under the Utilities menu, click Tax Groups.
  2. Click New. The New Tax Group dialog box displays. 
  3. Enter the New Tax Group information. 
    Note: Required fields display with a red asterisk. 
    • Tax Group Name - Enter a name for the new tax group.
    • Tax Group Type - Click the drop-down list to select one of the following types:
      1. Sales - Select this type to use the Tax Group on a Billing Line or Opportunity Line
      2. Purchases - Select this type to use the Tax Group on a Payable Line
      3. Sales and Purchases - Select this type to use the Tax Group on a Billing Line, Opportunity Line, or Payable Line. 
    • Description - Enter a brief written explanation for the purpose of the new Tax Group.

      Tax Inclusion_01.png

      The Active checkbox defaults to selected. The Tax Group lookup field on the following objects filters on Tax Groups that are marked as Active:
      • Billing Lines
      • Payable Lines
      • Recurring Billing Lines
      • Recurring Payable Lines
      • Opportunity Product
      • Product
  4. If you are using the Tax Inclusive calculation for this Tax Group, select the Tax Inclusive checkbox.
    Note: This is only applicable if you are using AS Native Tax with Header Level Posting. When this checkbox is selected, the Combined Tax Rate for the Tax Group will be calculated in the Tax Amount.
  5. Click Save. The Details tab displays.
  6. Click the Related tab. Then in the Tax Rate section, click New.
  7. Enter the New Tax Rate information for the first rate that you want to include in this Tax Group.
    Note:  Up to five Tax Rates can be included in a Tax Group. 
    Note:  Required fields display with a red asterisk. 
      • Tax Rate Name - Enter a name for the new tax rate. For example, this might be a new tax rate for a specific state or county. 
      • Tax Group - This defaults to the new Tax Group. 
      • Tax Rate % - Enter the percentage rate for this new Tax Rate in the form of a percent. For example, ten percent is entered as “10”
      • Purchase Tax Expense GL Account - Enter the appropriate GL Account. This is only necessary if the Tax Type on the Tax Group was selected as Purchases or Sales & Purchases. 
      • Sales Tax Liability GL Account - Enter the appropriate GL Account. This is only necessary if the Tax Type on the Tax Group was selected as Sales or Sales & Purchases. 
      • Description - Enter a brief written explanation for the purpose of the new Tax Rate. 

        AS_Native_Tax_23.png
  1. Click Save to save the new Tax Rate. Otherwise, click Save & New to save the new Tax Rate and automatically refresh the New Tax Rate dialog box to create another new Tax Rate.

Note: Tax Groups that have been used on a Recurring Billing Line, Billing Line, Recurring Payable Line, Payable Line or Opportunity Product Line cannot be deleted nor can the Combined Tax Rate be changed. This means that child Tax Rates cannot be added or deleted, nor existing child Tax Rate percentages changed. Additionally, the Tax Inclusive checkbox cannot be modified if there are existing records using a Tax Group. If you need to make a change it is a recommended best practice that you create a new Tax Group and make the old Tax Group inactive. 

Users should remove the old Tax Groups from existing Recurring Billings, Recurring Payables and Products.

Clone a Tax Group

  1. Navigate to Accounting Home and click the Setup tab. Then, under the Utilities menu, click Tax Groups.
  2. Select a list view (other than the Recently Viewed list view).
  3. Under the Tax Group Name column, click the hyperlink for the group that you want to clone.
  4. Click Clone w/Tax Rates. The Clone Tax Group dialog box displays.
  5. Enter the name for the new group that will be cloned from the selected one.
    Note: If the Tax Group Name is not changed, when you click Clone Tax Group, a duplicate of the existing group will be created.

    Clone_Tax_Group_01.png

    Note: Tax Rates that are associated with the selected Tax Group will be included on the cloned version.
  6. Click Clone Tax Group. The newly cloned Tax Group displays. 

Assign a default Tax Group to a Product

You can assign a default Tax Group to a Product so that each time the Product is used on a Billing Line or Payable Line, the default Tax Group will automatically populate.

  1. Navigate to Accounting Home and click the Setup tab. Then, under the Master menu, click Products.
  2. Display a desired Product record and click Edit.
  3. Scroll down the page to Accounting Information. 
  4. In the Tax Group field, click the Lookup icon to search for and select a Tax Group.

    AS_Native_Tax_02.png

  5. Click Save.

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Line Level Posting (LLP)

Under AS Native Tax LLP, taxes are calculated as a summary tax total. The tax calculation will be performed on the sum of all Billing Lines, Payable Lines, or Opportunity Product Lines that have a taxable product. Accounting Seed uses Product records as tax rates in the system and these are referred to as “Tax Rate Products.” 

Accounting Seed requires you to set up your own Tax Rate Products and assign them to customers if you are not using the Avalara integration. Your products also need to be flagged as taxable or tax exempt so tax is correctly calculated only on taxable products and ignores non-taxable products. 

Do you want to:

Set up a Tax Rate as a Product

Tax products can be added and existing products can be updated with the Products import template and the Tax Rate Import Template for Line Level Posting (LLP), which are both available on the Import Templates knowledge article.

  1. Navigate to Accounting Home and click the Setup tab. Then, under the Master menu, click Products.
  2. Click New.
  3. Enter the Product Name and select the Active checkbox.
  4. From the Tax Type drop-down list, select Tax Rate.
  5. Populate the Revenue GL Account field with the Sales Tax Liability GL Account.
  6. Enter a Tax Rate.  
  7. Complete any additional fields, if necessary.

    AS_Native_Tax_12.png
    Note:  The Tax Code field is not applicable to AS Native Tax. 
  8. Click Save.

Add a Tax Rate to an Account

  1. Navigate to the Accounts tab and select a Customer or Vendor.
  2. Select a list view (other than the Recently Viewed list view).
  3. Select a desired Account.
  4. On the Account page, click the Related tab.
  5. Scroll down the page to the Taxes related list and click New. 
  6. Select a Tax Rate for the Account. 

    AS_Native_Tax_13.png

  7. Select a Tax Type (Sales or Sales & Purchases).
  8. Click Save.

Set up a Product as Taxable or Tax Exempt

Note: If you are calculating tax on an Opportunity, the Tax Rate Products must be added to a Price Book. 

  1. Navigate to Accounting Home and click the Setup tab. Then, under the Master menu, click Products.
  2. Click New. Otherwise, select an existing product. 
  3. Enter the Product Name and select the Active checkbox.
  4. From the Tax Type drop-down list, select Taxable Product or Tax Exempt Product.
    Note: The Tax Rate selection in the drop-down list is only used in the creation of a Tax Rate Product and should not be selected. Likewise, the Tax Rate field is only used in the creation of a Tax Rate Product. 

    AS_Native_Tax_14.png
    Note:  The Tax Code field is not applicable to AS Native Tax. 
  5. Click Save.

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____________________

SPRING '23 RELEASE ICON.png

Spring '24 Release

Release Notes and Schedule

  • The Tax Inclusive calculation is available if you are using Header Level Posting (HLP) with AS Native Tax as your tax method.

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