Invoicing - percent of labor not taxable

Mike or Penny Novack stepbystepfarm at dialup4less.com
Wed Mar 28 08:50:17 EDT 2018


On 3/27/2018 6:28 PM, Matthew Pressly wrote:
> Our state tax laws are such that most of the work that I do is 
> considered "data processing" of which 20% is exempt and 80% is 
> taxable. Is there a good way to configure GnuCash to handle that when 
> making an invoice?

It's worse than this (the general case) and we may be asking too much of 
an accounting package (as opposed to a "point of sales" system that 
feeds the accounting package). A state might have complex rules about 
what is taxable and at what rates.

We'll start with to your example. Suppose your services to some client 
included some sort of work taxed at 100%, some data processing at that 
80/20 rate, and some sort of work not taxed at all. Obviously whatever 
rule could not be based on the invoice total but would have to be based 
on the parts of the bill. And could you reasonably expect the accounting 
package to "know" the categories? What if that were complicated.

Take a store selling (among other things) clothing in my state. In 
general "clothing" not taxed BUT individual items of clothing above a 
certain price taxed and perhaps clothing "accessories" taxed (or other 
items people might think of as in the category "clothing"). Ordinarily 
it is a "point of sales" system that accesses a database of what it 
taxable and produces the receipt/bill with the amount that is tax 
figured out (and then THAT passed to the accounting package -- and 
probably the inventory package).

When we fault gnucash for not doing some of the things available with 
this or that commercially available "business system" we forget that 
those business systems come with parts doing those things. They are 
built up of cooperating pieces only one of which is "accounting". In 
many cases not monolithic systems as different sorts of entities would 
need only certain parts. Thus a "store" would want POS and inventory, a 
professional service not need those but would want billable hours, and 
both would want payroll.

Michael D Novack


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