1.3 Taxes and Labor

Tax classes

If any of your items are taxed at a different tax rate than your sales tax, you can add tax classes for them under Settings > Tax Classes. If we keep building upon the filing cabinet analogy from the 1. Sales taxes section of this article, you can think of tax classes as folders within your shop's drawer. By assigning certain items to a tax class, they'll be filed into a folder and taxed at the correct tax rate when you ring them up at your register.

E.g. If clothing is tax exempt in your shop, the items assigned to the Clothing tax class will be taxed at 0% instead of 8.875%. 

Add a tax class

1. From the main menu, click Setting > Tax Classes.
2. Click + New Tax Class.
3. Enter a class name.
4. Click Save Changes.
5. From the main menu, click Setting > Sales Taxes.
6. Click your shop's sales tax.
7. From the Class drop-down, select the tax class you created.
8. In the Class Tax Rate field, enter the tax rate of your tax class.
9. Click + Add New Rate.

Labor tax

If you've enabled the Service module when following the 1.1 Essential Settings article and your labor charges are taxed at a different tax rate than your items, you'll need to add a labor tax class that has a custom tax rate.

Add a labor tax with a custom tax rate

1. From the main menu, click Setting > Tax Classes. If a tax class called "Labor" already exists, skip to step 4.
2. Click + New Tax Class.
3. In the Class Name field, enter Labor. This will make sure that your Retail account will recognize it as the tax class for your labor charges.
4. From the main menu, click Setting > Sales Taxes.
5. Click your shop's sales tax.
6. From the Class drop-down, select Labor.
7. In the Class Tax Rate field, enter the custom tax rate of your labor tax.
8. Click + Add New Rate.

Tax labor and service automatically

Now that you've added a labor tax class with a custom tax rate, you can also avoid additional clicks and errors at the register by taxing your labor charges automatically. To do so, simply enable the Tax Labor/Service setting for your shop.

1. From the main menu, click Settings > Shop Setup.
2. Click your shop .
3. From the left menu, click Details. 
4. In the Tax Setup area, select the Tax Labor/Service checkbox.
5. Click Save Changes.

Labor rate 

If you've enabled the Service module when following the 1.1 Essential Settings article, it could be because you have employees that provide a service to your customers at a certain labor rate per hour. If so, you can set this labor rate to automatically charge your customers based on the amount of hours and minutes you enter in your shop's work orders.

Set a labor rate 

1. From the main menu, click Settings > Shop Setup.
2. Click your shop.
3. From the left menu, click Details. 
4. In the Service / Labor area, enter the labor rate per hour that you charge in the Service Rate ($/hour) field.
5. Click Save Changes. 

Advanced

If you have a multi-store account, you may need to configure additional sales taxes and tax classes to meet you business needs.

As for configuring labor tax and labor rate settings in your multi-store account, simply repeat the instructions in the previous steps 2. Labor tax and 3. Labor rate of this article in your other shops.

Set sales taxes in a multi-store account

To set sales taxes in your multi-store Retail account, its helpful to think of your Retail account as a filing cabinet that has a drawer for each shop.

When you log in to a Retail account for the first time, the sales tax you set in the Getting Started Wizard determines the sales tax of your first shop. To determine the sales taxes of your other shops, you need to manually set a sales tax for each of them. Its these sales tax settings that in turn determine the default tax rate to apply when you ring up taxable items at your different shops.

E.g. If your Retail account (filing cabinet) is called "Shop of Things", you have shops (drawers) in both New York and Austin, and your shops' sales taxes are set to 8.875% and 8.25% respectively, then all your taxable items will be taxed at 8.875% in New York and 8.25% in Austin.

If you need multiple sales taxes for a shop, you can create them and either apply them ahead of time in your settings or on the fly during a sale. You can also set sales taxes in customer accounts and customer types to make sure that specific customers are automatically taxed correctly.

E.g. If you're a Retailer located in the Unites States and you have customers who purchase items over the phone from a different state, you'll need to create an Out-of-State sales tax. This way, you can tax these customers correctly by setting the Out-of-State sales tax in their sales, in their customer accounts or in their customer types.

Add sales taxes

1. From the main menu, click Settings > Sales Taxes.
2. Click + New Sales Tax.
3. Enter a tax name.
4. Enter a tax rate.
5. Click Save Changes.
6. Repeat the above steps until you've added all the sales taxes you need for all your shops.

Set sales taxes in your shops' settings

1. From the main menu, click Settings > Shop Setup.
2. Click a shop.
3. From the left menu, click Details.
4. From the Sales Tax drop-down, select a sales tax.
5. Click Save Changes.
6. Repeat the above steps until you've set a sales tax for all your shops.

Set a sales tax in a sale

1. From an in progress sale, click Set Tax.
2. From the Tax drop-down, select a sales tax.
3. Click Save Sales Tax.

What's next?

• 1.4 Discounts