Computing tax on item cost instead of price

1.

Set up a Sales Tax type based on cost: a. Click Setup. b. Expand Financial. c. Click Sales Tax. d. Click New. e. In the Description field, type a description of the sales tax type, e.g., State Tax on Cost. f. In the Code field, type a short code for the sales tax type, e.g., ST-COST. g. In the Sales Tax Rate (%) field, type the amount of sales tax, e.g., 10.000. h. Click Save And Close.

2.

Set up an Item Tax type based on cost: a. Click Setup. b. Expand Financial. c. Click Item Tax. d. Click New. e. In the Description field, type a description of the item tax type, e.g., Tax on Cost. f. In the Code field, type a short code for the item tax type, e.g., TAX-COST. g. Select Compute tax on Cost instead of Price. h. In the Apply individual taxes in the following order section, for the 1st tax select the Sales Tax type you set up earlier, e.g., State Tax on Cost. i. Select On Receipt to print the sales tax on receipts. j. Click Save And Close.

3.

Set up an item so that POS computes tax on the item's cost: a. Click Merchandising. b. Click Items. c. Look up and open the item. d. Click the General tab. e. From the Item tax drop down, select the Item Tax type that you set up earlier, e.g., Tax on Cost. f. In the Cost field, type the cost per unit, e.g., $8.00. g. Click Save And Close. Now, when the item is added to a transaction in POS, the tax is calculated on the item's cost. For example: Item Tax (%10) x Cost ($8.00) = $8.80.