knowledge base

Are sales taxes included in your posted price but required to be shown separately on your sales invoices?  Having a little trouble setting it up?  Not to worry!  Let inFlow do your calculations for you!

Showing pre-tax price in body of receipt
If you need to show your price before tax in the body of the receipt (as in the UK) but don’t want to have to calculate all your pre-tax prices by hand, inFlow can do that for you.  To achieve this we suggest having inFlow calculate the difference for you by setting up two pricing schemes: a standard price which matches your posted price and another which reduces your price by the appropriate percentage to show it without tax.  Once the item has been reduced in the sale, you will be able to apply the sales tax to bring it back to the posted price while allowing inFlow to natively show the included tax.

In this example, let’s assume that your posted price for a pair of shoes is £50.00.  You will need to figure out what portion of that price is tax.  To do so you must reduce your price by the appropriate percentage which—believe it or not—is not the same as your sales tax.  The original price (i.e. pre-tax) can be determined using the formula: OriginalPrice = PostedPrice * [1 / 1+SalesTax].  Once you have the result of the second calculation you will have the number by which you must multiply your posted price to get the pre-tax price or “original price”.  Longform the calculation appears as follows:

OriginalPrice     = PostedPrice * [1 / 1+SalesTax]
                          = £50.00 * [1 / 1 + 17.5%]
                          = £50.00 * [1/ 1.175]
                          = £50.00 * [0.851]
OriginalPrice  = £42.55

Now that we know that our original price was 85.1% of the posted price (this is determined by multiplying 0.851 * 100, equalling your percentage), we also know that the remaining 14.9% was the sales tax.  So, that means that we must tell inFlow to reduce the posted price by 14.9% during our sale.  Now  that you’ve figured out the percentage, setting up the calculation is the easy part.  After you have set up your product with the posted sales price, simply open the product pricing window by going to Main Menu > Inventory > Product Pricing, and select all your products.


 
Then create a new pricing scheme which reduces your normal price by 14.9% and click adjust.




    
Once you’ve done that you can set your default pricing scheme (Main Menu > Settings > Company Settings, “Pricing and Tax”) to the reduced scheme and inFlow will calculate the reduction for you.  The last step is to make sure that you have your sales tax in the system by clicking the “Edit Tax Schemes” button and creating a 17.5% tax and setting it as default.
 



 
What you will end up with after these arrangements are made is a sales invoice which reduces the price you have posted by the appropriate percentage so that the sales tax can be included on the invoice.




Showing posted price in body but showing tax included
In Australia, for example, it is common to show the product price including the tax, and then at the bottom of the invoice, show the amount of the GST that was included in the above prices.  We're aware that inFlow currently doesn't have great support for this, and offering a built-in solution is on our wishlist.  In the meantime, here's a suggestion that you might be able to use to set up the taxes included. 

Let’s look again to the pair of shoes but this time, assume they are $50.00 AUD.  You can set up your products with the tax-included price and then two taxes in inFlow that cancel each other out.  In this setup, the body of the order will not be affected - it first takes away 10% and then adds back 10% and the total will remain the same.  There, however, a trick to setting this up since (as above) the reduction percentage is not the same as the sales tax you will be charging.  To that end you will need to enter 9.0909% instead of 10%$ as shown below:



You can create a custom document that shows only the positive tax next to "Tax Included".  This way, your final invoice shows the tax included prices and the amount of tax included, as below:



In this case, as above, you can see that there was $5.00 of tax included in the posted retail price of the shoes but the price is not reduced in the body of the invoice.  By using this method you can show your customer the price they were quoted while still including the necessary tax notation below.

We've prepared a sample custom document that works this way.  You can download it at
http://www.archonsystems.com/support/tax_included_receipt.doc

You can import this as a custom document into inFlow and try it out.  More info on how to set up custom documents: 
http://www.inflowinventory.com/KnowledgeBase/questions/193/