When recording sales to customers, you are responsible for charging them sales tax, which you are in turn responsible for paying to the appropriate sales tax authorities. Most states have you pay sales taxes directly to the state revenue department, which distributes the money to the appropriate authorities for you. Some states have you pay each authority directly. Either way, you will set up whomever you send your sales tax check to as a vendor. Here is an overview of the process:
- Set up your state or whomever you send your tax check payments to as a vendor in Maintain Vendors; or you can do this during the set up of your sales tax IDs when you use the Sales Taxes wizard. How do I set up sales taxes?
- Use the Sales Taxes wizard to set up Sales Tax IDs. Sales Tax IDs are made up of sales tax agencies and indicate the total percentage of tax on a sale. A sales tax ID can be made up of one or more agencies. For example, you can have a 2% transportation tax (which is one agency) and a 3% state tax (which is another agency) on sales, which add up to a 5% tax for your tax ID. Sales Tax IDs are set up using the Sales Taxes wizard. To start the wizard, select Maintain, then Sales Taxes from the Sage 50 Menubar.
- Use the Sales Taxes wizard to set up Sales Tax Agencies. Agencies are individual taxing agencies, such as the state, the local county, the local city, and so on, to whom you must send sales taxes that you collect from your customers. Each agency will have a name, ID, vendor who will collect the taxes, account to which collected taxes will be applied, and a percentage that is taxed. Agencies are set up using the Sales Taxes wizard. To start the wizard, select Maintain, then Sales Taxes from the Sage 50 Menubar.
You can easily edit both sales tax IDs and agencies, should a tax ID change or should the percentage taxed by an agency change.