This article applies to Practice Ignition accounts using our legacy tax system. To identify if your account is using the legacy or new tax system, visit "Settings" and then "Taxes". If you can see the "Add new tax" option, refer to this article instead.
The sales tax module allows you to specify default tax rates for services, and provides options in how you present proposal prices. Setting up your tax rates will make sure your connected invoicing systems will have the correct tax rates populated when Practice Ignition generates an invoice.
Note: Taxes can only be enabled if you have an accounting app connected. Tax rates are imported from your accounting app - If you need to edit your tax rates, it needs to be done in your accounting app and then synced with Practice Ignition.
Tax display will allow you to modify how you wish to display tax on the proposal acceptance, engagement letter & web connector as well as customize your tax label display.
Tip: The Sales Tax Label can be customized however you wish. If you have flat tax rates, you can include the tax rate on the label to make it visible to your clients e.g. instead of using GST, use 10% GST.
Setting Your Default Tax Rate
When a default company tax rate is set, services will default to this rate but this of course can be overridden at a service and proposal level. The company default tax rate will be highlighted in the list.
Countries With Flat Rate Sales Tax
Australia and New Zealand have flat rate sales tax which means for the most part, the services they are offering have a fixed sales tax applied regardless of who they are selling to.
In this situation, unless you have a specific requirement to specify a tax rate that different from your default i.e. a service that you offer is tax exempt, then it's not critical to upgrade your existing proposals.
Countries With Variable Sales Tax
Countries such as the United States, United Kingdom, Canada and parts of Europe have more complex tax requirements. Tax rates can differ from service to service and can differ based on who you are providing the services to.
In this situation it is recommended to review and upgrade each proposal individually. Upgrading the proposals will mean that future invoices will be sent to your invoicing system correctly and editing invoices to set tax rates will no longer be necessary.
Please see the section below and follow the steps to upgrade your existing proposals.
Setting Taxes at a Service Level
At a service level you can provide tax rate overrides. Most customers can just keep this defaulted but if there is a particular service that you would like to default to a certain rate when you a building a proposal you can set it here.
Click into the Services tab, then click the service you want to edit.
Setting Taxes at a Proposal Level
When you select a service while building a proposal, the default tax rate will be selected. This is either the service override rate or the company default rate will be used as a fallback.
This is the tax rate that will be used during tax calculations for proposal amounts and for invoices.