Managing taxes can be complex, especially if you're unfamiliar with accounting processes. Fortunately, X-1 simplifies this task, making it user-friendly and straightforward.
To learn how to set up tax exemptions and pre-pay taxes, click here
Understanding the Types of Taxes in X-1
Sales Taxes
Sales Taxes are taxes imposed on the sale of goods and services to your customers. In X-1, sales taxes are applied to the final sale price of your products or services.
Example: If you sell a product for $100 and the sales tax rate is 5%, the total price charged to the customer will be $105.
Cost Taxes
Cost Taxes are taxes applied to the cost of goods before sales tax is calculated. In X-1, cost taxes are used to build up the weekly cost price of fuel or other products by adding additional costs such as environmental fees, import duties, or other applicable taxes. This ensures that the sales tax is calculated on the total cost of the product, including these additional taxes.
Example: If the base cost of fuel is $1 per gallon, and there's a cost tax of $0.10 per gallon, the adjusted cost before sales tax becomes $1.10 per gallon.
Setting Up Taxes in X-1
Navigate to the Tax Setting menu.
Select +New Tax from the top right-corner option
Decide whether to apply the tax to specific products or an entire product category to save time. For example:
For Specific Products:
Go to the Products/Services section.
Select individual products like Jet A or Avgas.
For Product Categories:
Select the Product Category option from the dropdown menu.
Select a category such as Fuel to apply the tax across all fuel types.
Choose the tax type. X-1 provides a thorough list of Federal, state, local, and other taxes commonly used in the aviation industry, simplifying the selection process.
Rule Description: Enter a descriptive name (e.g., "State Sales Tax").
Date Range: Select the start and end dates for when this tax should apply. This is useful if the tax rate is temporary or changes over time.
Understand Priority Levels:
Priority Matters: X-1 processes tax rules based on priority levels from higher to lower. If multiple tax rules could apply, the system uses the priority levels to determine which rule to apply.
Best Practice: Assign higher priority levels to the most specific or important tax rules.
Add Conditions for Specific Scenarios:
Tailor tax rules for different customer types, payment methods, or other criteria.
Example: For government companies with a different tax rate:
Label these customers with the description "Government".
Create a tax rule with a condition that applies only when the customer description is "Government".
Customize Tax Display on Invoices:
Apply to taxable items: Use this option when you want the tax to apply to those products you have marked 'taxable' in your Products and Services list.
Show Tax on the Invoice: Decide whether to display taxes directly on the invoice.
Show Tax on the Invoice Footer: Choose to display tax information at the bottom of the invoice.
Show Tax in a Separate Line: For clarity, you can display taxes as separate line items.
Taxable: Use this option if you want sales taxes to apply on top of this tax you are setting up.
Accounting Mapping:
Use the Accounting tab to associate the tax with GL accounts for accounting export purposes.
Always remember to save your changes :)