Taxes Overview
Taxes are an important component of any POS system. Taxes need to be calculated accurately so that customers can be informed of the taxes they pay with their purchases. These calculations are also essential to the production of reports and payment of these taxes to the local fiscal authorities. Improperly configured taxes can incur heavy penalties for merchants, so special care needs to be given to the configuration of taxes.
Sequence for configuring taxes
When setting up taxes in Veloce, following a logical sequence will make the work easier. It will also avoid having to go back-and-forth between various configurations to achieve the desired result.
The general steps are:
Research and understand local tax laws.
Create tax categories in Veloce.
Create taxes in Veloce.
Assign taxes to Sales Items or Divisions in Veloce.
1. Research and understand local tax laws
This is the first and most important step. Understanding the local tax regulation will ensure that taxes will be configured properly in Veloce. The Veloce tax calculation engine is powerful and flexible. To be able to select the appropriate options for your region, you first need to understand the regulation thoroughly. Here are some general guidelines:
Determine which taxes and rates are applicable
Some jurisdictions have federal taxes, provincial or state taxes, liquor taxes and even special taxes on sodas or sweetened beverages. Some areas apply taxes on food items, while others don't. Some areas have variable tax rates based on whether the food is consumed on-premises (dine-in) or off-premises (take-out).
Determine how taxes will be calculated
Taxes can be added to the price of an item (add-on tax) or can be included in the list price of the item (inclusive tax). It is also important to understand how rounding works. Most areas calculate rounding to the nearest cent ($0.01) while some simply truncate everything after the second decimal.
2. Create Tax Categories in Veloce
Once you understand how taxes work in your area, you need to determine how taxes will be grouped for reporting purposes. Taxes are grouped together using Tax Categories in Veloce. Every tax needs to belong to a tax category. Here are some common tax category examples:
Federal Tax
Provincial Tax
State Tax
Liquor Tax
Food Tax
3. Create taxes in Veloce
Create each tax in Veloce. Each tax will be assigned to a tax category and configured according to local tax laws.
4. Assign taxes to Sales Items or Divisions in Veloce
Each Sales Item and Division in Veloce can be configured with all available taxes. This provides maximum flexibility so that Veloce can be adapted to any tax regulation on all markets.
IMPORTANT! Taxes need to be created before any sales items. This will allow you to select relevant taxes during the sales items creation process, instead of having to go back on every single item after the fact. This is a huge time-saver when creating a new Veloce database.
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