Setting up tax codes

Tax codes are available under the Settings tab to track obligations for sales tax, goods and services tax, value added tax and other taxes imposed by a country or regional tax authority.

When you are using tax codes, you will be able to select a tax code for each transaction line. For example, if you receive 1,100 which includes 10% tax, it can be recorded as follows.

Similarly, if you spend 550 which includes 10% tax, it will be recorded like this:

By using tax codes, Manager will automatically allocate the pre tax amount to the selected account while the remaining tax amount will be allocated to a tax liability account.

For example, if your sale for 1,100 includes 10% tax, your income will increase by 1,000 and your tax liability will increase by 100. An expense for 550 including 10% tax will increase your selected expense account by 500 and the tax liability account will decrease by 50.

Tax Summary report under the Reports tab summarizes all transactions by tax codes for you to track the total tax collected and tax paid and calculate the amount payable or refundable to your tax authority.

In-built tax codes

Manager includes in-built tax codes for over 80 countries. By default, you need to add tax codes applicable to your business. If your country is not on the list, you will need to create custom tax codes.

Custom tax codes

Custom tax codes provides the generic framework for creating simple and complex tax codes to handle almost any tax scenario.

To set up a custom tax code, go to the Settings tab.

Click Tax Codes.

Click New Tax Code.

Click New custom tax code.

Enter the tax code name and select Custom in the Tax rate dropdown box. If the custom tax code includes only one component, select Single in the next dropdown box that appears and enter the custom rate:

If the custom tax code includes more than one rate, select Multiple rates and enter each tax component on its own line. Use the Add Line button to add additional components.

You need to set up sales tax with multiple components like this because when issuing sales invoices, your tax components will be shown separately:

If your tax code contains multiple tax components with at least one subject to compounding, enter the compounded rate into the Tax rate field.

Click the Create button to save the tax code.