On Cloud, you can apply taxes to items in quotes with great flexibility. You can add all the required taxes and set the default product and labor taxes globally under "Settings> Catalog> Taxes." If needed, you can also change taxes at the opportunity, quote, and item levels.
Methods to apply tax
You have three methods to apply taxes.
#1 Automated
Cloud has a built-in integration with Avalara, which is enabled by default. This integration applies taxes to items in quotes based on the location and address set in opportunities.
You don't have to apply taxes manually in every opportunity or quote.
Some of the other options available when using the Avalara integration are:
Project address to use: You can select whether to apply tax to the site or billing address.
Apply tax: You can select whether to apply tax only to products or to labor as well.
Show tax as: You can select whether to show taxes as a "Single tax," a single line item in the proposal, or a "Group tax," with multiple line items showing the tax breakdown.
Tax name: A name for the tax on the proposal when shown as a group tax. You can change the name in the proposal.
Check out this article for more details.
#2 Manual, same on all items
If you want to apply taxes manually with the same tax rates for all items in the quote, do the following:
1/ Turn off the Avalara integration by setting the "Automatically set taxes based on project address" option to OFF.
2/ Select the tax method as "Same for all items."
3/ Select the default product tax and default labor tax.
4/ Add the taxes you want to use, following the steps listed here.
5/ When creating the opportunity or in the quote, manually change the product and labor taxes based on the location and address.
#3 Manual, on items individually
If you want to apply taxes manually but at the item level, you need to do the following:
1/ Turn off the Avalara integration by setting the "Automatically set taxes based on project address" option to OFF.
2/ Select the tax method as "Set on each item individually."
3/ Follow the steps listed here to add the taxes you want to use.
4/ Follow the steps listed here to apply tax to individual items in their side panel in the quote.
If you have enabled the Avalara integration, you can use method #1, #2, or #3 in the opportunity or quote.
If you have disabled the Avalara integration, you can only switch between method #2 and method #3 in the opportunity or quote.
Add taxes and tax groups
You can add single taxes and tax groups under "Settings > Catalog > Taxes."
To add a single tax:
1/ Click the "New tax" button on the right and select "Tax" in the modal.
2/ In the next modal, name the tax, specify the tax rate, and select whether the tax is applied to the cost or price of the product or labor.
To add a group tax, create all the individual taxes you want in the group.
Once you have created all individual taxes:
1/ Click the "New tax" button on the right and select "Tax Group" in the modal.
2/ In the next modal, name the tax, click "Add tax," and select and add the taxes.
In the following example, we want to add a tax group with two different taxes.
Different ways to apply tax
You can apply or update tax on items in different ways: at the opportunity level, in the quote, and at the item level.
You need to have the "Manage quote taxes and tax settings" permission in the "Opportunities" permissions group, or you need to be a member of a group that has it, to update taxes at the opportunity, quote, and item level.
Without the permission, all tax options seen at the opportunity, quote, and item level are read-only.
# Opportunity level
Once you set the tax method under "Settings > Catalog > Taxes" (Automated or Manual), the method is selected by default in the modal to create new opportunities.
In the following example, we disabled the Avalara integration and set the same tax rate for all items.
# Quote level
You can change the tax method set in the opportunity, tax rates, and add new taxes to the quote. You can also change the tax status of the adjustment applied to the quote.
Change tax method
You can change the tax method set in the opportunity. Changing the tax method overwrites item-level taxes.
When you change the tax method from Automated to Manual, or vice versa, Cloud prompts you to review manual tax updates and assess the implications.
To change the tax method:
1/ Go to the Quote Details view.
2/ Click the 3-dot menu next to the quote number and click "Settings > Tax Settings."
3/ Change the tax method.
If you change the tax method to "Same for all items," select the product and labor tax.
If you change the tax method to "Set on each item individually," follow the steps listed here to apply tax to individual items in their side panel in the quote.
If you change the tax method to Automated, Cloud applies taxes based on the site address.
Change tax rates
When building the quote, you may have to change the tax rates if the site address has changed.
If you are using the Avalara Tax integration:
Change the site or billing address (the address you're applying tax to) in the left pane of the Opportunity Details view.
Cloud automatically updates the taxes applied to the quote.
The tax rates from two states are shown under "Settings > Tax Settings" in the 3-dot menu of the quote. However, the proposal only shows the tax rates for the new site address.
If you are not using the Avalara Tax integration:
1/ Go to the Quote Details view.
2/ Click the 3-dot menu next to the quote number and click "Settings > Tax Settings."
3/ Select the new product and labor taxes, then click "Save."
You can also click the "Pencil" icon next to the Tax label in the "Overview > Summary" tab and change the taxes.
Add new taxes
You may want to use custom tax rates for a quote that are not defined in the catalog.
To add a new tax:
1/ Go to the Quote Details view.
2/ Click the 3-dot menu next to the quote number and click "Settings > Taxes."
You can see the taxes used in the quote.
3/ Click "New tax," select "Tax" or "Tax Group," and add the new taxes as per the steps described here.
You can apply the new tax only to the quote.
Change tax for adjustment
You may want to update the tax status of an adjustment applied to the quote.
To update the tax status.
1/ In the Quote Details view, go to "Overview > Summary."
2/ Click the "Pencil" icon next to the Adjustment label on the right.
3/ Click the 3-dot menu of the adjustment, then click "Edit."
4/ In the modal, change the tax status and click "Save."
# Item level
You can apply a tax rate at the item level for all types of items: product, labor, subscription, service plan, and allowance.
To apply a tax rate to an item:
1/ Go to the Quote Details view.
2/ Click the item, and in its side panel, select the tax in the "Tax" dropdown in the "Price details" section.
Tax breakdown in the quote
If you want to see the breakdown of taxes in the quote, go to "Overview" in the left navigation menu, click the "Summary" tab at the top, and expand the "Tax" label.
Tax display settings in the proposal
In the proposal, go to the Edit menu in the "Summary" section. You can show the total taxes as one line item or list each tax as a separate line item.
