If you charge tax, by default unit prices on sales invoices are treated as tax exclusive. You can make unit prices tax-inclusive when creating or editing invoices.
Tax exclusive means, when line items on the invoice are subject to tax, the tax will be added to the tax-exclusive total.
For example, let’s say we charge a customer 1,000 with 10% tax.
Since the amount of 1,000 is tax exclusive, when you create the invoice, 10% tax will be added to the 1,000, increasing the total to 1,100.
Many businesses prefer to show tax-inclusive prices on invoices. For example, you sell a widget for 999 which should be inclusive of tax. In order to do that, make sure Amounts are tax inclusive
is checked.
Then enter unit price 999
.
When viewing the invoice, you will notice the tax of 10% wasn’t added to the amount of 999
. The balance due is 999
and the invoice shows the tax amount.