Setting Up Sales Tax in Alpaca RMS

Alpaca RMS can process sales tax in two ways including 1)Destination Based Sales Tax (U.S.), and 2) VAT/GST tax. The Destination Based Sales Tax is what is seen in the United States where sales tax is added after the subtotal of goods and services. The VAT/GST is built in to the price of the goods and services already before checkout.

Tax Included (VAT/GST)

Tax Included is prevalent in most jurisdictions around the world. The customer knows what to expect for the bill when he walks to the register. If the price is $1, he will pay $1 since the tax is embedded in the price.

From the Configuration Menu, click the Tax tab and select Tax Included, then fill out the Tax 1 Rate Name and Percentage. If you need a second rate, fill out Tax 2 Rate and Percentage. These can be combined in one item or used separately.

Tax Rate in Configuration Tax Tab

When you go into the Item, you will see Tax 1 and Tax 2 listed. You can modify the percentage for each individual item here if you do not want the default rate. If you do not want to charge a tax for the item, change the Tax Rate percentage to 0.00 or leave it blank.

Tax Rate in Item Detail Screen

Ring up your item and see the tax added. Here the product is priced $10 on the shelf, and the system shows you the tax charged.

Destination Based Sales Tax

This tax is jurisdiction based and can be variable based on product sold. You might have to charge 6% tax in one county, but 7.5% tax in another county. Or you may have to charge 9% for durable goods and an extra 2% for hospitality tax for prepared foods, or perhaps a lower tax for fresh foods such as 2%.

There are two places to work on taxes with Destination based taxes in Alpaca RMS. The main menu Taxes button and the Configuration button.

Start with clicking the Taxes button. You be presented with four tabs: Tax Codes, Tax Jurisdictions, Tax Categories, and Tax Rates.

Tax Setup

Tax Codes – these codes allow you to assign customers as Taxable or NotTaxable (exempt) such as default customer, or wholesale customers. The Customer edit screen allows you to choose Tax Codes, as does the default Tax settings in the Office Config menu.

Tax Codes in Taxes menu

Tax Codes for Default Customer in Office Config Tax settings (you’ll set this later after you set the rest of the Tax settings above).

Tax Jurisdictions – these are the tax locations that your store delivers or sells goods in physically. Most stores will have one Tax Jurisdiction if you sell at your store and customers take the goods with them. However, if you deliver products to multiple jurisdictions such as inside different city limits, counties or states, you will charge tax per that jurisdiction where product is delivered (this is also called Nexus in some jurisdictions).
Tax Excluded and Tax Included are how the taxes are calculated with the product. Most US based businesses will price as Tax Excluded where the tax shows in addition to the price of the product. Tax Included would be used if you want to sell whole dollar amounts and not have tax cause the end amount to fluctuate, such as selling $1 Hot Dogs. Tax Included would have the tax embedded in the $1 price, and Tax Excluded would add tax in addition to the price such as $1.10. Tax Included is similar to a VAT tax setup.

Tax Jurisdictions

Tax Categories – these are the different types of items and how they are taxed such as Food, Non, or just a generic Tax.

Tax Categories

Tax Rates – build the actual rate with all of the previous built codes from above. Here we built a Tax Code charging 7.000%, non-tax at 0%, and Food at 2%.

At this point, you can edit the Item Detail of a product and choose the Tax Category to be used for that item. You can do this individually with all items. You can build a Non Tax tax code here for the typically smaller amount of goods that are non-taxable and edit those NonTax items and let the majority of taxable items be taxed according to global settings.

To set the Global Tax Default, build the destination based taxes as shown above, then go to the Configuration menu and click the Tax tab. Check the Destination Based Tax checkbox. Then select the corresponding Default Tax Code Tax Category and Tax Jurisdiction. The system will charge tax per these settings. You must build a NonTax category and rate in the Taxes setup above in order to exclude those products from getting taxed automatically with these Global Tax Settings in place. You could set tax categories exclusively in the Item Detail and not select defaults if you have multiple default rates.

NOTE: generally speaking, gift cards and vouchers are not taxable when sold, but when redeemed. This includes Bitcoin Vouchers, Bitcoin Lightning Vouchers, Gift Cards and Gift Certificates. Services in the U.S. are generally not taxed such as Labor or Installation, but services such as Shipping may be taxable. Check with your tax authority to confirm taxable products and services.