Sales Tax Treatment

Sales tax calculations are based on when and how you enter transactions into Splendid Accounts, and the tax rate selected for each line item.

The sales tax portion of each transaction (or line items within a transaction) is determined by the tax rate you select when creating a tax – Tax on Sales (n%)

Purchase Tax Treatment

Purchase tax calculations are based on when and how you enter transactions into Splendid Accounts, and the tax rate selected for each line item.

The Purchase tax portion of each transaction (or line items within a transaction) is determined by the tax rate you select when creating a tax – Tax on Purchases (n%).

Set up tax rates for your country

To find tax rates, under Setup Menu select Tax in the General Column.

The single tax rate for sales and purchases

1. Identify the tax rate you need to pay and collect
2. You can update the default Tax on Sales and Tax on Purchases tax rates and enter your tax rate.

The single tax rate for sales and purchases, with additional reporting requirements

1. 1. Look at your last one or two sales tax returns to identify the reporting requirements you need.

For example, your tax maybe 10% on all sales and purchases, but you’re required to report all sales to the government separately.

1. Update the default Tax on Sales and Tax on Purchase tax rates and enter your tax rate of 10%.
2. You can add a new tax rate called Tax on Govt sales, with a single component sales tax at 10%.

Different tax rates based on the type of goods and services being bought and sold

1. 1. Identify what taxes you need to collect or pay by looking at the sales and purchases you have made recently.

For example, you may sell food and charge a 10% tax on cooked food, but 5% tax on uncooked food, while all of your purchases are at 5%.

1. Add a new tax for Tax paid on Purchases and enter your tax rate of 5%.
2. Add a new sales tax rate called Tax on cooked food, with a tax rate of 10%.
3. Add a new sales tax rate called Tax on uncooked food, with a single component of sales tax at 5%.

Different tax rates based on the location of your customers

1. Identify what taxes you need to collect by looking at the tax you’re currently applying to your invoices.
   For example, you may sell to customers in your city (Lahore) at 9%, customers in your state (Punjab) at 8.25%, and customers out of your state at 7.25%, while all of your purchases are at either 9% or exempt.
2. Add tax for Tax paid on Purchases and enter your tax rate of 9%.
3. Add a new sales tax rate called Lahore sales tax with two components, City tax at 0.75% and State tax at 8.25%.
4. Add a new sales tax rate called Punjab sales tax with a single component of State tax at 8.25%.
5. Add a new sales tax rate called Out of state sales tax with a single component of Out of state tax at 7.25%.