Zomentum calculates tax while adding the products in a document. The taxes on these products are determined based on two factors:
- Tax jurisdiction (location) of your customer and your business
- The product or services being sold to your customer.
Depending upon the above factors, the products & services your company sells can have a standard VAT (Valued-Added Sales Tax), multiple lower rates, and tax exemptions.
Zomentum gives you the flexibility to configure tax rates based on the various rules and jurisdictions. Before configuring taxes in Zomentum, you will need to define the following elements:
1. Tax Regions: the tax region will include those tax jurisdictions in which you sell products and services. A tax region can encompass an entire country, a state, a province, or municipality. You must add a separate tax region for each tax jurisdiction in which your firm is buying and selling.
- In Canada, the same tax rate applies across an entire province. If you are a Canadian business selling into multiple provinces, you must set up a separate tax region for each province.
- In the United States, sales taxes may vary between states, counties, and municipalities, so a separate tax region may need to be created for each area in which the firms buys and sells services.
2. Tax Category: Add all the different categories of products and services that occur in your tax jurisdictions. E.g., Hardware, Services, Labor, etc.
Setting up Tax Regions
- Navigate to Settings -> Tax Setup
- Click on the Add Region button in the upper right corner
- Enter the name of the Region
- Choose if you want to make this region the default. Unless changed, the default tax region will be applied to each new client you add in Zomentum unless changed.
- Be sure to enter all regions in which your firm sells its products & services
Setting up Tax categories
- Go to Settings -> Tax Setup
- Switch to the Tax Category tab
- Click on the Add Category button
- Enter the Category Name
- Enter the Tax Code
- [Optional] Select the default product types.
- Enter the tax rates for each region. If there are multiple tax levels under each region, add each to the system
- Once all values have been added, click on the Save button
Example Consider you are selling Hardware to a customer in Orange county of NY. New York state charges 4% sales tax, and Orange County charges 3.375% for a total of 7.375%. In this case, you would set up: 1. A Tax region called "NY - Orange County" 2. Add Tax Category called "Hardware" 3. Add 2 tax level - NY State tax (4%) and Orange county tax (3.375%)
TIP It is possible to create one tax region for multiple tax jurisdictions. If you sell into multiple states you do not have a presence in and are therefore not required to collect sales taxes, you could set up a sales region called Out of State and apply it to all customers that are located outside of your own state.
Key things to remember
- After adding a new tax region, navigate to tax category and assign the appropriate rates for each new region under each category
- The default rate for any new tax region is 0%
Editing the Tax Rates
If you would like to alter existing tax rates, follow the steps below:
- Go to Settings > Tax Setup
- Click on the Tax Category tab
- Click Edit next to the category you wish to change
- Input the new tax rate
- Click on the Save button
Key Things to Remember:
- Refresh each page once updated tax rates have been properly entered
- The new rates will be applicable to the products in the quote block of the relevant documents
What happens when you deactivate a Tax Region or Category?
Once you deactivate a Tax region, the following events will occur:
- You will no longer be able to associate clients with an Inactive Tax Region. Any new client additions must be added to an Active Tax region.
- You cannot associate a document with an Inactive Tax Region. All new documents must be attached to an Active Tax region.
- All the previous clients & documents created within an inactive Tax region will remain in place and continue to use the corresponding tax rates when calculating taxes for those line items.
Once you deactivate a Tax category, the following events will occur:
- You no longer will be able to associate any products with an Inactive Tax Category. Any new product you create must be attached to an Active Tax region.
- All previous products created with an inactive Tax region will remain in the same category and continue using the corresponding rates when calculating taxes for those line items.