Tax Codes

A tax code lets you combine different sales taxes into a defined group; you can then apply the required taxes at one time. Once you have set up your tax codes, Sage 50 Accounting automatically fills in the taxes associated with a vendor or customer. This lets you apply the required taxes for a vendor or customer who is subject to several different taxes, without having to enter the taxes separately.  

Which tax code is used in a transaction?

Sage 50 Accounting provides different ways to apply tax codes. You can apply a tax code to any item in a transaction, as the default for a customer or vendor, or as the default for all new customers. If there is a conflict, Sage 50 Accounting applies the first available tax code according to the following list:

  1. Tax code assigned to a transaction item.
  2. Default tax code for customer or vendor record.
  3. Default tax code for new customers or vendors.

Tax Exemptions

If some of your customers are exempt from one or more of the sales taxes that you normally charge, you should set up tax codes that do not include the tax, and use these codes for the tax-exempt customers. Sage 50 Accounting prints the codes on invoices so customers can tell what they have been charged.

Similarly, if you are exempt from paying tax to some of your vendors, set up tax codes for vendors to whom you do not pay tax. If you do sometimes charge or pay the tax to these customers or vendors, set up tax-exempt codes, and remember to set the Tax Exempt setting to No on the Taxes tab in the customer and vendors records.