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How to Set Up Sales Tax in Dynamics GP and Dynamics NAV

Posted by Alanna Friedberg on Jul 5, 2022 10:30:00 AM

How-to-Set-Up-Sales-Tax-in-Dynamics-GP-and-Dynamics-NAVThe collection of sales taxes for goods and services sold to customers is essential to any company. If you don’t manage the process correctly, that could lead to major headaches. The way you calculate sales tax varies depending on the rules of different counties, states, and countries. In addition, businesses must account for updates whenever there are any changes to tax requirements.

Organizations can cut back on their risk by using your company’s Dynamics GP or Dynamics NAV instance to automatically calculate sales taxes. From there, you can generate a sales report. Let’s look at the overall sales tax process and how you can go about Dynamics GP sales tax setup or Dynamics NAV sales tax setup. 

What is the Sales Tax Process?

You need two pieces of information to correctly assess sales taxes. First, you need the current tax rates and an understanding of applicable taxability rules. Both Dynamics NAV and Dynamics GP make it easier to keep up with sales taxes if you’re selling goods nationwide or internationally. Both systems use the information set up in internal tax tables to calculate appropriate sales taxes. 

Your work doesn’t end after completing a sale. There are a lot of decisions to be made for issues like remitting payments, keeping your tax calendar updated, sending out notices, and filing exemptions when needed. You can generate a Dynamics GP sales tax report or one from Dynamics NAV to help you navigate the complexities of correctly filing tax information with the proper authorities. 

Steps for Dynamics GP Sales Tax Setup

Microsoft Dynamics GP tables that hold information about tax details and tax schedules used in calculations. Your tax details include data about specific taxes, the current tax rate, and the tax authority that your company pays. 

You need to complete the following tasks before you enter information about your tax details and schedules. 

  • Enter a chart of all your accounts through the General Ledger.

  • Set up any applicable shipping methods. This is important as taxes get calculated at the point of exchange.

  • If you make your goods or services available to international customers, go through the international setup procedures.

There are two separate procedures involved in setting up sales taxes in Microsoft Dynamics GP. The below steps cover establishing your tax details.  You must do this for any jurisdiction where you plan to conduct business.

Set Up Tax Details in Dynamics GP

  1. Click on the Administration tab, then go to Setup -> Company -> Tax Details.

  2. Type in a tax detail ID along with a description for that detail. Use a descriptive ID that help you distinguish between sales and purchases.

  3. Go to the Type list and select Sales.

  4. Enter the registration code for the specific tax into the Tax ID Number field if it’s required by your county.

  5. Go to the Account field, then enter an account used to track paid or received taxes.

  6. Choose one or both available History options. Calendar Year tracks your tax detail history based on calendar months, which is helpful for government reporting. Fiscal year tracks details based on defined fiscal years. That way, you can create a Dynamics GP sales report for that fiscal period. 

  7. Pick an option from the Based On list to select your tax base, which determines how to calculate taxes for this detail.

  8. Pick an option from the Round list that determines how you want to round off your tax amount.

  9. Type in a rate or amount for your tax detail in the Percentage or Amount field.

  10. If Taxable Amount Min and Max fields appears after your Based On selection, you can enter a minimum or maximum amount or leave them blank. If you do enter an amount, you’ll need to select an option from the Include list to clarify whether to tax the entire transaction amount or only what’s in the Min and Max fields.

  11. Click the Mark the Print on Documents option if you are required by law to identify taxes on your invoices.

  12. Click the Mark the Tax Invoice Required option to claim input tax on your Business Activity Statement (BAS) for a specific tax detail.

  13. Click the Address button to enter address information for a taxing authority.

  14. Click Save.

You can view the information you entered by printing a Tax Detail ID report. Select a tax detail, then go to File -> Print.

Set Up Tax Schedules in Dynamics GP

  1. Go to the Tax Schedule Maintenance window by navigating to Administration -> Setup -> Company -> Tax Schedules.

  2. Type in a tax schedule ID along with a description.

  3. Add details for the specific schedule by selecting a tax detail from the Available Tax Detail ID list, then clicking the Insert button.

  4. Click Save.

Steps for Dynamics NAV Sales Tax Setup

Users must establish a tax calculation type before they can set up sales tax in Dynamics NAV.

  1. Go to the search box, type in Tax Posting Setup, then select the related link.

  2. Pick the correct tax.

  3. Go to the Home tab, then go to the Manage group and select Edit.

  4. Enter Sales Tax into the Tax Calculation Type field.

  5. Select OK.

Set Up Sales Tax Group

A sales tax group is a list of items or resources that are subject to taxes.

  1. Go to the Search Box, look up Tax Groups, then choose the related link.

  2. Select New in the Tax Groups window.

  3. Fill in the Code to assign to the tax group and a Description for the group.

  4. Select OK.

Set Up Sales Tax Details

Your Tax Details contain information that helps you establish proper tax rates for tax groups.

  1. Enter Tax Details in the Search box, then select the related link.

  2. Select New in the Tax Details window.

  3. Enter the following information for your tax details.

    1. Tax Jurisdiction Code

    2. Tax Group Code

    3. Tax Type

    4. Effective Date

    5. Tax Below Minimum

    6. Maximum Amount/Qty

    7. Tax Above Minimum

  4. Select OK.

Let Dynamics Handle Your Tax Issues

Internet eBusiness Solutions can help you configure a new or current Dynamics instance to calculate your sales taxes or to handle other business processes. Feel free to contact one of our Microsoft experts for more information.

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Topics: Microsoft Dynamics GP, Dynamics NAV