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Apply Tax to an Invoice

Introduction

In some states, and with some services you can apply a tax to your client invoices. Please be aware of your local guidelines to ensure you are applying tax appropriately.

Tax On the Firm Level

You can standardize tax settings for your firm in order to help prevent mistakes. To set up your firm-level tax settings follow the instructions below.

1. Click on the Setup Tab

2. From Firm Settings > Financial, scroll down to Tax Settings

3. Complete the Tax Settings fields

  • Default Matter Tax Status – Use this to set the default tax methods for new matters. Here you can select Taxable, Out of State, or Nontaxable. To make Time and Expense cards taxable automatically, choose Taxable here.
  • Enable an Additional Tax Rate – Enable this only if your jurisdiction requires two separate taxes.(ex. one for federal and one for state/province)
  • Sales Tax – Enter the appropriate number (%). For taxable matters, this tax rate would be applied to matter cost(expense cards, overhead).
  • Service Tax – Enter the appropriate number (%). For taxable matters, this tax rate would be applied to your service fee(time cards)
  • Tax ID – You can enter a tax ID if necessary.

4. Click Save at the top right of the Financial Settings page

Tax on the Matter Level

You can choose to handle taxable matters on a case-by-case basis. To do this, you can choose to complete only some of the fields shown above on the firm level. For example, don’t set a default matter tax status but do set a default tax rate for sales and/or service tax. Or, you may just choose leave those fields blank and handle tax completely at the matter level – turning on the taxable settings and setting tax rates each time you create a matter.

To manage tax settings at a matter level follow the instructions below.

1. From the Add Matter or Edit Matter screen, scroll down to Advanced Settings

2. Click the Tax tab

3. Select the Tax Status (set as taxable to turn on tax settings).

4. The rates applied will be those defined at the Firm Level as shown above. If you chosen not to set default tax rate at the firm level or this matter happens to have different rates than usual, you can set special rates for this matter by clicking Localized Billing Rate. 

5. Click Save to save the changes on the matter

All set! Now the time and expense entries for this matter will be taxable. When you create an invoice for this matter, tax amounts will automatically be calculated.

Tax on the Time / Expense Level

If you choose not to set tax settings at the firm or matter level, you can do so when entering a new time and/or expense card. This works well if you only wish to charge tax on certain items for a particular matter, and not all associated time/expense entries.

If you need to manage tax settings when entering a time or expense card, follow the instructions below.

1. From the Add Timecard/Expense Card or Edit Timecard/Expense Card screens, scroll to Advanced Settings

2. Click on the Tax tab, and check the box for Taxable if you wish to apply tax

All set! When you create an invoice for this matter, it will calculate tax amounts associated with the items you set as taxable.

Updated on January 3, 2019

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