On Cloud, you have great flexibility when applying taxes to the products and labor you sell in projects.
Under "Settings> Catalog> Taxes, " you can add all the required taxes and set the default product and labor taxes globally. If necessary, you can also change the taxes in the quotes.
Options to apply tax
You have three options to apply taxes to the products and labor in your quotes.
#1 Automated
Cloud has a built-in integration with Avalara, which is enabled by default. This integration applies taxes to the items in the quotes based on the location and address set in the opportunities.
You don't have to apply taxes in every opportunity or quote manually.
Some of the other options available when using the Avalara integration are:
Project address to use - you can select whether to apply tax to the site or billing address.
Apply tax - You can select whether to apply tax only to products or to labor, too.
Show tax as - you can select whether to show the taxes as a "Single tax," a single line item in the proposal, or a "Group tax," with multiple line items showing the breakdown of the taxes.
Tax name - a name for the tax on the proposal when shown as a group tax. This name can be changed in the proposal.
Check out this article for more details.
#2 Manual, same on all items
If you want to apply taxes manually with the same tax rates for all items in the quote, you will need to do the following:
1/ Turn off the Avalara integration by toggling the "Automatically set taxes based on project address" option.
2/ Select the tax method as "Same for all items."
3/ Select the default product tax and default labor tax.
4/ Add the taxes you want to use, following the steps listed here.
5/ When creating the opportunity or in the quote, manually change the product and labor taxes based on the location and address.
#3 Manual, on items individually
If you want to apply taxes manually but at the item level, you will need to do the following:
1/ Turn off the Avalara integration by toggling the "Automatically set taxes based on project address" option.
2/ Select the tax method as "Set on each item individually."
3/ Follow the steps listed here to add the taxes you want to use.
4/ Follow the steps listed here to apply tax to individual items in their side panel in the quote.
If you have enabled the Avalara integration, you can use option #1, option #2, or option #3 in the opportunity or the quote.
If you have disabled the Avalara integration, you can only switch between option #2 and option #3 in the opportunity or quote.
Add taxes and tax groups
You can add single taxes and tax groups under "Settings > Catalog > Taxes."
To add a single tax:
1/ Click the "New tax" button on the right and select "Tax" in the modal.
2/ In the next modal, name the tax, specify the tax rate, and select whether the tax is applied to the cost or price of the product or labor.
To add a group tax, you will need to create all the single taxes you want to add to the group.
Once you have created all required taxes:
1/ Click the "New tax" button on the right and select "Tax group" in the modal.
2/ In the next modal, name the tax, click "Add tax," and select and add the taxes.
In the following example, we want to add a tax group with two different taxes.
Choose taxes for the opportunity
Once you have set the option to apply tax, automated or manual, under Settings, the option will be selected in the modal to create new opportunities.
You can switch from automated to manual and between the manual options but not from manual to automated.
In the following example, we have disabled the Avalara integration and chosen to set the same tax rate for all items.
Change tax in the quote
When building the quote, you may have to change the tax rates in the following scenarios.
The site address has changed while quoting
If you are using the Avalara Tax integration, you need to change the site or billing address (to the address to which you're applying tax) in the left pane of the opportunity details view.
Cloud will automatically change the taxes in the quote.
You will see tax rates from two states under the Settings wheel in the quote. However, the proposal will show the tax rates for the new site address.
If you are not using the Avalara Tax integration:
1/ Go to "Overview" and the "Summary" tab.
2/ Click the "Pencil" icon next to the Tax label on the right.
3/ Select the new product and labor taxes.
You want to set the tax on items individually
For some reason, if you want to set the tax on each item individually, click the "Pencil" icon next to the Tax label, as described above, and change the tax method to "Set on each item individually."
You can now set the tax for each item individually from its side panel by following the steps listed here.
Apply tax rates to items individually
To apply different tax rates to items:
1/ Go to the quote details view.
2/ Click the item, and in its side panel, select the tax in the "Tax" dropdown in the "Price details" section.
Tax display settings in the proposal
In the proposal, go to the Edit menu in the "Summary" section. You can show the sum of all taxes as one line item or the individual taxes as separate line items.
