Gnucash Business: Proposal: handling multiple tax accounts

[Derek Atkins]

You're still not answering the question I'm asking...  You're looking
at it from the customer point of view, not the merchant.  I'm asking
from a merchant point of view.

-derek

Kevin Benton <KevinB@webex.com> writes:

> If my read of it is correct, the customer already paid sales tax.
> Therefore, you would use the formula...
> 
> Price = Total / ( 1 + STAP )
> 
> as below.  You'd work backwards.  If you don't, you wind up paying more tax
> as a merchant while your customer gets a free discount.  :/
> 
> Kevin Benton
> 
> WebEx Communications, Inc. accepts no liability in relation to any personal
> emails, or any content of any email that does not relate directly to the
> business of WebEx Communications, Inc.
> 
> 
> -----Original Message-----
> From: Derek Atkins [mailto:warlord@MIT.EDU]
> Sent: Thursday, June 13, 2002 7:02 PM
> To: Kevin Benton
> Cc: Conrad Canterford; gnucash-devel@gnucash.org
> Subject: Re: Gnucash Business: Proposal: handling multiple tax accounts
> 
> 
> Thanks, but this wasn't quite what I was asking.  I was asking a
> procedural question, not a mathematical question.  I was asking how
> the process works for determining prices; do you start with the final
> price and work backwards, or do you work forwards?  Following that,
> does it imply that the "TaxIncluded" flag means work backwards, too?
> That would mean that you enter the final price and the tax is computed
> backwards from that?  It also doesn't answer the "where do you set the
> TaxIncluded flag" question....
> 
> But thanks for making the math simple for others on the list ;)
> 
> -derek
> 
> Kevin Benton <KevinB@webex.com> writes:
> 
> > Anyone who operates a vending machine business has this problem.  A little
> > algebra helps on this one.
> > 
> > Total is the total advertised price (including tax)
> > Price is the actual price without sales tax.
> > For this equation, STAP is the Sales Tax Aggregate Percentage including
> all
> > taxes.
> > 
> > Total = Price * (1 + STAP)
> > Since the total and tax rates are known, we need to get price by itself.
> > First, let's get Price on the left like we're used to...
> > 
> > Price * (1 + STAP) = Total
> > Then, what we do to the left side, we must do to the right.
> > 
> > Price * (1 + STAP) / (1 + STAP) = Total / (1 + STAP)
> > 
> > Price = Total / (1 + STAP)
> > 
> > Try it for yourself - plug in the numbers off a receipt you've been given
> > and see if it works both ways.
> > 
> > $1.00 item taxed at 5% requires a payment of $1.05.
> > Price = $1.05 / (1 + 0.05) = $1.00
> > 
> > Imagine that... :)  Now you know how to compute sales tax backwards and
> > forwards. :)
> > 
> > Kevin Benton
> > 
> > WebEx Communications, Inc. accepts no liability in relation to any
> personal
> > emails, or any content of any email that does not relate directly to the
> > business of WebEx Communications, Inc.
> > 
> > 
> > -----Original Message-----
> > From: Derek Atkins [mailto:warlord@MIT.EDU]
> > Sent: Thursday, June 13, 2002 5:59 PM
> > To: Conrad Canterford
> > Cc: gnucash-devel@gnucash.org
> > Subject: Re: Gnucash Business: Proposal: handling multiple tax accounts
> > 
> > 
> > Conrad Canterford <conrad@mail.watersprite.com.au> writes:
> > 
> > > To do it properly, its a little more complicated than that. In
> > > Australia, an extra option "Tax included" would also be appreciated, as
> > > a large number of small businesses (and especially any retail business)
> > > will advertise and invoice the *tax inclusive* price. Asking whoever is
> > > doing the accounts to deduct the tax from every invoice as its entered
> > > is not going to make you any friends...  :-)
> > 
> > Where should this "tax included" option be stored?  Since prices
> > are advertized with-tax, how is the tax calculation made?
> > 
> > > I think a global table would be preferable. If someone is running
> > > multiple entities, this might save them re-entering a lot of data. If
> > > they are not, well it makes no difference to them.
> > 
> > What do you mean, "global table"?
> > 
> > > >   b) How do you reference tax tables for "posted" entries?
> > > >      - Tax Tables are immutable.
> > > >      - Tax Tables are mutable until they are "used" (at which point
> > > >        they become immutable).
> > > 
> > > Personally, I'd go for this one.
> > > 
> > > >        I think this might be too confusing for a user.
> > > 
> > > Why? A simple dialog pops up saying "I'm sorry, but this entry is in use
> > > by an invoice and cannot be changed.".
> > > 
> > > >      - Tax Tables are mutable, however when you post an invoice the
> > > >        Tax Table code creates an internal, immutable copy that is
> > > >        linked to the mutable tax table in question.
> > > 
> > > This is really just an enhanced version of (b) as far as I'm concerned.
> > > Basically (if you think of it the other way around), when the user goes
> > > to change a tax table entry that's been used, the system automatically
> > > creates a new version of that entry and isolates the old one. This is
> > > just as prone to confuse a user as (b). However, I think any of the
> > > other options are also likely to confuse users, just in different ways.
> > 
> > The reason I prefer this last appoach is that:
> > 
> >  1) to the user, the tax table is always mutable.  They can change it
> >     at will, but
> >  2) any posted invoices will refer back to the tax table that existed
> >     when it was posted, and
> >  3) all the magic happens under the covers, as far as the user is
> >     concerned, and
> >  4) it will save space by reusing tax-tables as much as possible.
> > 
> > Thanks for your feedback.
> > 
> > -derek
> > -- 
> >        Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
> >        Member, MIT Student Information Processing Board  (SIPB)
> >        URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
> >        warlord@MIT.EDU                        PGP key available
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> 
> -- 
>        Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
>        Member, MIT Student Information Processing Board  (SIPB)
>        URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
>        warlord@MIT.EDU                        PGP key available

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord@MIT.EDU                        PGP key available