Invoicing - percent of labor not taxable

[Matthew Pressly]

On 03/28/2018 07:50 AM, Mike or Penny Novack wrote:
> 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.

I think the approach suggested by Derek will do what I need, basically 
adding to the tax table a tax rate that is 80% of the actual sales tax 
rate. Then when creating the invoice, I indicate for each line item 
whether or not it is taxable, so tax is computed per line item, as 
applicable, instead of basing it on the totals. If a line item is 
taxable at the 80% rate, I assign it into one "sub"-account, and if it's 
not taxable, I assign it into a different subaccount. This way, with 
some additional arithmetic, I can total taxable sales and non-taxable 
sales separately for tax reporting.

In the more  general case that you describe below, it might be necessary 
to have multiple entries in the tax table, then choose a different tax 
table entry as needed for different line items (sorry, my terminology is 
not very exact on this).

>
> 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.

Hopefully I didn't sound like I was faulting GnuCash in any way -- that 
was definitely not my intent. I've been using GnuCash for about a year 
and have found it a very capable. I am mainly trying to streamline 
invoicing. The accounting I do is for my web development business, which 
is a small, part-time operation, so I'm trying to keep things as simple 
and as inexpensive as possible.

Thank you for your input.

--
Matthew