Tax is added to each line item individually. This gives you the flexibility to charge taxes only on your taxable services and sales.
In this article, we'll cover:
What is a Tax Item?
Creating a new Tax Item
Applying tax to a line item on an invoice or package
What is a Tax Item?
A Tax Item is a saved rate for tax that you can apply to your line items and packages.
Creating a Tax Item will add an Income Category and an Expense Category under Reporting >> Chart of Accounts so that you can track the tax you collect throughout the year as well as when you make a tax payment.
Creating a New Tax Item
Tax items can be created directly on an invoice line item or a package line item. The process is exactly the same for both methods.
While editing or creating the line item on your invoice or package, locate the Tax section and click New Tax Item.
Enter a name for your tax, for example "CA Sales Tax."
Enter the percentage rate for your tax.
Click Add to save the Tax Item.
Click Save Item to save your changes to the line item.
Applying Tax to a Line Item
After you have created a Tax Item, you can apply it to any line item on an invoice or package. Again, the process is exactly the same, whether you are working on an invoice or a package.
While editing or creating the line item on your invoice or package, locate the Tax section and click Select Tax applicable.
Select the correct Tax Item from the dropdown list.
Click Save Item to save your changes and apply the tax.
If you need to remove the tax, just edit the line item again and click on the X next to the Tax Item you'd like to remove.
Can I apply tax to the entire invoice?
No, tax must be applied individually to each line item.
Can Dubsado automatically calculate tax based on my client's location?
Unfortunately not. If you need to charge different tax rates based on your client's location, create a new Tax Item and name it appropriately. The next time you get a client from that location, you'll be able to add that Tax Item to the line items on their invoice.
Can I edit tax items after I've created them?
You can edit tax items under Reporting >> Chart of Accounts by clicking the gear icon next to the tax you'd like to edit. However, we do not recommend editing tax items that you have already been using on packages and invoices. Changing the percentage will not affect past invoices, but changing the name of a tax item will prevent transactions from appearing in your chart of accounts. We recommend creating a new tax item if you need to charge a new tax.