Sales tax rates and labor that isn't taxed

Many states tax the equipment and materials you sell but not your installation labor. Maryland, for example, charges 6% sales tax on equipment and generally doesn't tax installation labor. With tax rates turned on, Hello to Paid taxes only the lines that should be taxed.

Set up your tax rates

1. Go to Settings → Proposals and find Sales tax.
2. Add a rate: a name your customers will see (like Maryland sales tax) and the percent. Click Add rate.
3. Click the star next to the rates new quotes should start with. Most businesses star one rate.
4. Turn Labor is taxed on or off. Lines marked Labor follow this; equipment and materials are always taxed.

Changing a rate or the labor setting only affects new quotes. Quotes, jobs and invoices you already have keep the tax they were made with, and a signed quote never changes.

On a quote

• Under Pricing & terms, Sales tax shows the quote's rates. Pick a different rate for a job in another county or state, or add a second one (like a local tax). Each rate is worked out and shown on its own.
• Labor is taxed can be changed for just this quote.
• Each line has a Tax setting. It follows the line type (Taxed for equipment, Not taxed for labor when labor isn't taxed). Choose Taxed (always) or Not taxed (always) to override it, for example for a permit fee.

The totals show Taxable, Non-taxable and each tax, and your customer sees the same on their quote, the PDF and their invoice. Lines that aren't taxed are marked Not taxed.

Discounts

A discount is shared between the taxable and non-taxable lines in proportion to their amounts. On a $3,500 quote with $2,250 of taxable equipment and a 10% discount, $225 of the $350 discount comes off the taxable part, so tax is 6% of $2,025: $121.50.

Tax is worked out once for the whole quote or invoice (not line by line) and rounded to the cent for each rate.

Invoices, jobs, change orders and progress invoices

• An invoice or job made from a quote is taxed exactly as the quote was.
• A change order follows its quote: the same rates, and labor taxed or not the same way. Labor taken off a quote that wasn't taxed takes no tax off.
• When you bill a quote in stages, a percentage or set amount bills the same share of the taxable and non-taxable parts (two lines on the invoice). The final invoice bills exactly what's left, including any cent left over from rounding, so the stages add up to the quote, tax included.

Questions

What about quotes I made before turning this on? They keep their single tax rate on everything. A quote you're still working on switches to your tax rates the next time you save it, so check its total.

Does the iPhone app work with this? Yes. The app still shows one tax rate; saving a quote from the app keeps its rates and which lines are taxed, unless you type a different rate there.