Purchase Order Tax/Shipping

1

When I enter a purchase order (or purchase invoice) I see no way to enter the tax or shipping I paid for the items. How is this entered?

2

Do these help ?
Issue purchase orders | Manager
Create purchase invoices | Manager

3

Also see Manager.io and all the links in that topic. That is the new Guide on tax codes. The older Guide is also still available at: Create and use tax codes | Manager.

4

Tax Codes do not seem to be what I am looking for. I need to be able to enter a specific amount of tax, and tax codes are all based on %

5

That’s unusual

Most taxes are a % of the selling price

Can you elalorate a bit more

6

If I buy an item from any online store (eBay, Amazon, etc) they charge me tax. I want to be able to track the amount of tax I paid for items separate from the cost of the items themselves.

7

The tax they charge will be a % of the selling price - this will depend on where the store is, where you live and where the product is delivered to but it will be a % of the selling price

The price you enter can be tax-inclusive or tax exclusive - in all cases if you use the approriate tax-code, Manager will calculate the tax

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8

That goal may be of dubious value from an accounting perspective. In your jurisdiction, you are paying sales tax, which is not an offsettable tax like value added tax. So the tax becomes part of the cost of the item you are purchasing. The same is true of shipping charges. In other words, “What did I pay to acquire the item for my business?” In such a situation, you would not apply any tax code in Manager, because tax codes create liabilities to the tax authority when selling and offset such liabilities when purchasing.

If you really insist on separating these separate costs of acquiring items, the way to do that is to break every purchase into three line items:

  • $X for the cost of the item, posted to a suitable expense account. If you are purchasing inventory, the cost will instead be posted to the asset account, Inventory on hand, or whatever other control account you defined when you set up the inventory item.
  • $Y for the tax, posted to an ordinary expense account you must create.
  • $Z for shipping, posted to another expense account you must create.

Note that for inventory items, this fails to include tax and shipping in the cost of goods sold when you sell the item. That is an issue you should discuss with your accountant.

If you are purchasing these items to use in completion of work for customers, there are also issues associated with collection and remittance of sales tax. Details of those issues depend on your state law, but generally, the entity who puts the item into use pays the sales tax and does not need to further assess tax on the sale. For example, if an electrician buys switches, wire, and outlets for a remodeling job, the electrician pays the sales tax, not the homeowner. I stress again, though, that this is jurisdiction-specific and a subject for your accountant to advise you about.

Whatever your accountant advises, Manager can handle.

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