Hi and thanks for watching. This video shows how to
set up sales tax so you can be
sure you're calculating taxes correctly on transactions.
We'll see how to set up a tax group to
assign to items that you buy and sell to indicate
that you or your customer pay sales tax on the
items, set up tax area codes that calculate sales tax
on sales and purchase documents based on the customer or
vendor, and apply tax area codes to customers and vendors manually.
These processes require general ledger accounts for tracking taxes on
receivables and payables. We're using the
Contoso USA data set that comes with Business Central, so
those accounts are ready for us.
We'll start by finding the assisted setup guide on
the Business Manager Role Center.
OK, let's take a look. The guide creates a tax
group called Taxable. We'll assign this group to the taxable
items that we buy. That's a separate process so
we won't see it in this video.
Next we'll specify the general ledger accounts we'll use to
track the tax code for sales and the tax we're paying
for items we purchase. These are often accounts like sales
tax, payable, and tax expenses.
Now we'll set up a tax area code. We'll assign
these to customers and vendors later. When we build or
buy from businesses with addresses in the city, county, or
state specified for the tax area code,
Business Central applies the tax rate to sales or purchase
documents. We don't have to specify all three, but sales
taxes are often a combination of city, county, and state.
We'll use the city of Fargo with the rate of
2%,
in Cass County at .5 percent, and a state tax
for North Dakota at 5%.
Business Central suggests the name, Fargo, ND, and we can change
it as long as we keep it unique.
We're almost there. We need to apply the tax area
code to our customers and vendors. We'll choose the check
boxes and when we choose Finish a filter window let's
us assign the tax area code.
The last step is to make sure that this tax
rate applies only to the city of Fargo. In the
Where field we'll choose City, then Fargo. We'll do that for
customers and vendors. That's all there is to it.
Now, when we create sales or purchasing documents, Business Central
calculates sales tax based on the tax area codes that
we just assigned to customers and vendors.
The Set up sales tax assisted setup is a
great way to quickly get started.
But what if we need to change something? For example,
if we add new customers or buy from new vendors.
What if a jurisdiction's boundaries change?
Go to the Customers or Vendors list,
now choose the tax area code and criteria to specify
the businesses to apply it to.
Thanks for watching this video about how to automate sales
tax calculations for sales and purchase documents. We've just seen
how easy it is to automate the process by using
the Set up sales tax assisted set up to quickly 
apply updates.
