There's a “Charges Tax” field that allows you to indicate when you’ve already paid tax to the vendor. Meaning, if you’ve already paid tax to the vendor you won’t have to pay it again. You’ll only pay for the markup / shipping when needed.
Here’s how to use it
When creating a new vendor under “Vendor Info” you’ll have an option to indicate whether or not the vendor charges tax.
Let Ivy know if the products related to this vendor are taxable by the vendor or not. Basically, you’ll be able to choose if your paying for all of the taxes or just for the markup. This will be included in proposals and invoices.
Clicking on the gear will open up options on how to set the tax, including item and shipping.
Tax settings - what do they mean?
- Total selling cost - this indicates that you will pay the total tax for the item including markup.
- *Markup only - this indicates that you have/will pay tax directly to the vendor on the item's cost, and will be reflected on the tax liability report and Project Tracker report accordingly.
- Not taxable - this indicates that the item is not taxable.
- Total shipping cost - this indicates that you will pay the total tax for the shipping including markup.
- *Markup only - this indicates that you have/will pay tax directly to the vendor on the item’s shipping cost, and will be reflected on the tax liability report and Project Tracker report accordingly.
- Not taxable - this indicates that the shipping is not taxable.
Tax Total on the bottom of a PR/IN when “markup only” is checked will show the same amount as when “total selling cost” is checked, because the client is reimbursing you for tax you pay to the vendor.
You can see the breakdown of vendor vs. client tax in two specific reports on Ivy: the taxes liability report, and the custom project tracker report.
*IMPORTANT: Please check with your Bookkeeper, CPA, or local state tax authority to verify how you are to handle tax paid at purchase for items being marked up and resold.
Not all states will allow you to file and pay taxes the way they are calculated with the markup only feature. It is important to also note that if you are integrated with QuickBooks Online the markup only feature will not adjust the QBO tax liability report; that report will show tax due for the full selling price of the item.
For more information on how to track sales tax paid to your vendor and run a report out of QBO if you are able to take a deduction on your sales tax return, read this article.
Project Tracker Report:
The project tracker is the most granular way to report taxes on Ivy, and gives you an item-by-item detailed tax breakdown. Under the "Total Selling Price" column, each item marked as taxable on a document will have a t icon indicating that the item is taxable. Hovering over the t icon will indicate the specific tax breakdown for that item:
In the example above, you can see the tax breakdown for a specific line item which was a "markup only" taxable item on the proposal:
- Tax paid to vendor = $23.50
- Additional tax paid by client on the markup = $7.05
- Total tax paid by client (for combined unit cost and markup) = $30.55
Exporting the project tracker to excel will also give you a granular breakdown of taxes paid by your client, taxes paid to your vendor both on the item and shipping:
Here's how this information is broken down in the project tracker report:
Taxes Liability Report:
The taxes liability report is an overview of the total taxable amount of products and services on invoices, and breaks down the total taxable amount of products, services, transaction fees, and the tax amount per tax agency.
Have questions about vendor tax? Contact us at firstname.lastname@example.org