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How to Setup Sales Tax in Sage 50 US and Canada

Sales tax in Sage 50

There are several popular accounting software options for mid-size to enterprise-size businesses on the market right now. The options for smaller businesses are more limited. There are numerous programs available for start-ups and small businesses that focus on customer relationship management and marketing rather than accounting. Sage 50 is a good choice for small businesses because it scales well. Here you know all about how to set up Sales Tax in Sage 50.

Sage 50 is accounting software designed for small and medium-sized businesses. It is user-friendly and intended to simplify daily tasks. Reports can also be created. These reports aid business professionals in gaining a better understanding of their operations. This is a great way to identify missed opportunities while capitalizing on what is currently working. Furthermore, everything on the software is secure. Users can thus be confident that their data is secure. If you have any questions about the features, the process, or anything else, there is also support available around the clock.

Sage 50 installation is straightforward. Simply follow the on-screen instructions and prompts. Administrative permissions must also be granted. Support is available if something does not work as it should. You can access learning topics on demand. There are also articles, product documentation, and other resources in the Sage Knowledge base. Sage Pros have trusted community members who answer questions online. In addition, the Sage team responds to inquiries via a variety of channels.

Setting up sales tax in Sage 50 2023 may appear to be a difficult task, but with the right approach, it is simple. This guide will walk you through the entire process of configuring sales tax in Sage 50. By the end of this guide, you’ll have a firm grasp of how to set up sales tax in Sage 50 and manage it with ease.

What is Sage 50?

Sage 50 Cloud is an accounting and payment platform created by the Sage Group to help small and medium-sized businesses. The fact that it was initially only used in businesses with no more than 50 employees is indicated by the number 50 in its name. The application is now utilized more frequently, though. The robust invoicing system in Sage 50 accounting software provides you with a report on the money flow right now. It enables you to view your bank accounts, finished transactions, available cash, and cash that needs to be withdrawn.

It sends you a detailed report on the state of your finances right now. You can look over future earnings and expenses, modify how often you receive reports, or filter by transaction type. You gain a lot of advantages from Sage 50’s banking and distributor-related functions, including the ability to reconcile your accounts, purchase orders, invoices, and payments. You’ll spend less time manually entering data because it can be fully integrated with your inventory management system for automatic updates. Support for screen readers is always also available. Small and medium-sized businesses can fully take control of the protection of their corporate identity thanks to Sage security. With Sage 50, you can feel secure using your software.

The dashboard can be tailored to the users’ requirements. Permissions must be granted, and information must be entered. The artificial intelligence will begin to learn once the accounts are created. This will make it easier to gain insight into the company. Human error is reduced when daily tasks are automated. These resources can then be reallocated to more productive and profitable tasks.

With automated processes compiling a company’s financials, executives can be confident that they are accurate, dependable, and easy to understand. It’s a great way to simplify numbers that might otherwise be confusing.

Benefits of Sage 50:

With its countless practical features and integrations, Sage 50 provides you with several advantages. You can:

  • Control your income and expenses.
  • Become knowledgeable about stocks and cash flows.
  • Connect your bank account for simpler transactions.
  • Utilize Office 365 to collaborate without interruption.
  • Link up with customers.
  • Securely access the cloud and copy data.
  • Trading with a variety of currencies
  • Keep track of your expenses and forecast your income.
  • Learn about the duties of various positions.
  • Sync with GoCardless
  • Make attractive offers and invoices.
  • Make purchase orders.

What is Sales Tax in Sage 50?

The government levies a sales tax, which is a type of consumption tax, on the purchase of goods and services. A typical sales tax is imposed at the point of sale, paid for by the retailer, and then given to the government. A company may be responsible for paying sales taxes in a particular jurisdiction if it has a presence there. Depending on the local laws, this presence may take the form of a physical location, a worker, or an affiliate.

Traditional or retail sales taxes are only levied on the final consumer of a good or service. Because the majority of goods in modern economies pass through several manufacturing stages, which are frequently handled by different entities, a significant amount of documentation is required to prove who is ultimately liable for sales tax. Assume a sheep farmer sells his wool to a yarn manufacturer. To avoid paying sales tax, the yarn manufacturer must obtain a government resale certificate stating that they are not the end user. The yarn manufacturer then sells the product to a garment manufacturer, who must obtain a resale certificate as well.

How Does the Sales Tax Work?

Indirect taxes are levied on the purchase of goods. They are called indirect taxes because the seller collects them from the buyer and pays the government. It may have a direct impact on the goods and services immediately. It is viewed as a regressive tax that unfairly burdens lower-income people.

Governments will occasionally waive taxes on a specific item. Moreover, taxes are not applied to purchases of goods used as raw materials. Not finished goods are regarded as inventory.

How to Setup Sales Tax in Sage 50

The following steps show you how to set up sales tax in Sage 50.

Step 1: Establish Tax Authorities

The first step in configuring sales tax in Sage 50 is to create tax authorities. Tax authorities are the entities in your area that collect and manage sales tax. State, county, and city governments are examples of these. To configure tax authorities in Sage 50, navigate to the “Lists” menu and select “Tax Authorities.” This will open a window where you can enter the tax authority’s name and address. Please enter the correct name and address, as this will be used to calculate the sales tax.

Step 2: Develop Tax Codes

Once you have identified the tax authorities, you will need to develop tax codes. Tax codes distinguish between the various types of sales taxes that will be collected. There are two types of tax codes in Sage 50: sales tax and use tax. The sale of goods or services is subject to sales tax, whereas the purchase of goods or services is subject to use tax. Go to the “Lists” menu and select “Tax Codes” to create a tax code. This will open a window where you can enter the tax code’s name and rate.

Step 3: Assign Customers Tax Codes

You’ll need to assign the tax codes to your customers once you’ve created them. This is accomplished by selecting “Customer Centre” from the “Customers” menu. This will bring up a window in which you can view and edit customer information. To assign a tax code to a customer, go to the “Additional Info” tab after selecting the customer. Select the appropriate tax code in the “Tax Code” field. Assign the proper tax code to each customer, as this information will be used to calculate sales tax.

Step 4: Create Tax Schedules

The next step in Sage 50 sales tax setup is to create tax schedules. Sales tax is calculated on invoices and sales receipts using tax schedules. To create a tax schedule, select “Tax Schedules” from the “Lists” menu. This will prompt you to enter the name and rate of the tax schedule. Make sure to enter the correct name and rate, as these will be used to calculate the sales tax.

Step 5: Assign Items to Tax Schedules

You will need to apply your tax schedules to the items you sell once you have created them. Select “Item List” from the “Items” menu to open a window where you can view and edit the item’s information. Click on the item’s “Additional Info” tab and choose the appropriate tax schedule from the “Tax Schedule” field. Assign the appropriate tax schedule to each item, as this information will be used to calculate sales tax.

Step 6: Establish a Sales Tax Payable Account

The final step in Sage 50 sales tax setup is to create a sales tax payable account. This is the account where you will keep track of the sales tax you collect.

Create a Sales Tax Code

A tax code allows you to group different sales taxes into a defined group, after which you can apply the required taxes all at once. Sage 50 Accounting automatically fills in the taxes associated with a vendor or customer after you have configured your tax codes. This allows you to apply the required taxes for a vendor or customer who is subject to multiple taxes without having to enter the taxes manually.

If some of your customers are exempt from one or more of the sales taxes you normally charge, create tax codes that do not include the tax and use these codes for tax-exempt customers. Customers can tell what they have been charged because Sage 50 Accounting prints the codes on invoices.

Similarly, if you are exempt from paying tax to some of your vendors, create tax codes for those vendors. Set up tax-exempt codes and remember to set the Tax Exempt setting to No on the Taxes tab in the customer and vendor records if you do occasionally charge or pay the tax to these customers or vendors.

Sage 50 Accounting offers several methods for applying tax codes. A tax code can be applied to any item in a transaction, as the default for a customer or vendor, or as the default for all new customers. If there is a conflict, Sage 50 Accounting uses the first available tax code from the list:

  • A tax code is assigned to a transaction item.
  • Default tax code for a customer or vendor record.
  • Default tax code for new customers or vendors.

Steps to Create a Sales Tax Code:

Step 1: Access Settings

  1. Open the Sage 50 software and go to the home window.
  2. From the Setup menu, select Settings.

Step 2: Navigate to Tax Codes

  1. Within the Settings window, click on Company.
  2. Then select Sales Tax and choose the tax code.

Step 3: Add a New Code

  1. In the Code column, enter a one- to two-character code on a new line.
  2. Then click on the search button next to the new code.

Step 4: Configure Taxes for the New Code

  1. For each tax that you want to include in the new code:
    1. Click on the search button in the Taxes column and select Taxes from the list.
    2. Click on the Search button in the Status column and select a position from the list.
    3. Enter the tax rate as a percentage in the Rate column.
    4. Recall, if applicable, check the box next to the Include in Price or Are Returnable column.
  2. Repeat the steps for any taxes you want to include.

Step 5: Close the Tax Code Details

  1. Click OK to close the Tax code description window

Step 6: Modify Description (Optional)

  1. Click the Description column and type a new description to replace the individual tax code descriptions that appear in your promotion.

Step 7: Specify Usage (Optional)

  1. If you want to use the tax code only with vendors or customers:
    1. Click on the specified search in use in the column.
    2. Select Purchases or Earnings from the drop-down menu.

Step 8: Save Changes and Close Settings

  1. When the changes to the fixed code are saved, click OK to close the Settings window.

Note: The specific steps and options may vary depending on your version of Sage 50. See the Sage 50 documentation or consult their sage 50 support team for further assistance.

Set Up Your Tax Rates

Sales taxes are assessed based on your company’s requirements and the locality in which you conduct business. To set up sales taxes, first, determine the rate for each tax you employ. Then combine one or more taxes into a tax code.

To identify the taxes that apply, you can apply a tax code to products, suppliers, or clients.

Steps to Set Up Your Tax Rates:

  1. Choose a default sales tax for new customers. You can change the sales tax for some of your customers if you don’t want to use the default tax.
  2. Sage 50 Accounting applies the first sales tax in your list of taxes to new vendors. You can change the sales tax you charge when you create a new vendor.
  3. For inventory items and services, tax-exempt status always takes precedence. If you buy or sell a tax-exempt item or service, Sage 50 Accounting does not calculate tax, even if the vendor or customer normally charges or pays it. Similarly, if you sell a taxable item to a tax-exempt customer, Sage 50 Accounting does not calculate tax.
  4. Add your business’s and your client’s tax information to any Sage 50 Forms you’ve created or modified if you intend to use them as your invoices.

Generating Reports in Sage 50

To customize a report, you can:

  1. Adjust the size of each information column to determine what type of information appears on the report.
  2. Choose which fields and titles appear in the report’s columns and their order.
  3. Choose the font and size for everything on the report.
  4. save customized reports as new reports.

To make a report more personalized:

  1. Double-click the Report in the Select a Report or Form window to open it.
  2. Column borders are represented by a vertical blue separator line flanked by double-headed arrows. To resize a column, follow these steps:

To save a report:

  1. On the Report Design window’s top, click Save. The Save As window appears in Sage 50.
  2. Name the report displayed by Sage 50 in the box. You cannot overwrite the default reports that came with Sage 50.
  3. Click OK once the name and description you want to use have been entered.

Steps to Setup Customer Sales Taxes

When you sell items or services to your clients you’re liable for collecting sales tax for your customers, you’ll need a sales tax ID. These sales tax IDs can be applied to customer invoices and customer records to calculate the appropriate sales tax.

You have two Methods. Choose the first option if you are setting up sales taxes for the first time.

Method 1: Setup a sales tax ID using all new sales tax agencies

  1. The Sales Taxes wizard will open when you click the Sales Taxes navigation aid in the Customers & Sales Navigation Center.
  2. On the Setup Sales Taxes window, choose Set up a new sales tax. Then click on Next.
  3. Fill out the appropriate information on the Set Up New States Tax window. For more information about the fields on this window, click here. Click Next when you are done.
  4. After that enter the appropriate information in the Add Sales Tax Agency window. Then click on Next.
  5. To create another sales tax agency, please return to the Add Sales Tax Agency window if you indicated that you needed to create more than one sales tax agency for this sales tax. Click on more information about the Add Sales Tax Agency window. Click Next after each agency has been entered.
  6. Fill out the fields at the top of the Sales Tax Entered window and make sure the agency information is correct before clicking Finish.

Method 2: Setup a sales tax ID using existing agencies

  1. The Sales Tax Rates wizard will be launched when you click the Sales Taxes navigation aid on the Customers & Sales Navigation Center.
  2. Choose Set Up a new sales tax from the Set Up Sales Taxes window. Then click on Next.
  3. In the Set Up New Sates Tax window, enter the relevant information. Tell me more about what to enter here. Then click on Next.
  4. On the Add Sales Tax Agency window, Choose the drop-down arrow to the right of the Sales Tax Agency ID field. This will open a list of existing IDs. Select the one you want to use. Click Next to complete the field information.
  5. Repeat step 4 if you require to add other existing agencies. Otherwise, enter details for any new agencies associated with this tax. Click on Next once you have entered each agency.
  6. Complete the fields at the top of the Sales Tax Entered window and verify that the agency information is correct, then click Finish to continue.

Steps to Remove a Sales Tax in Sage 50

Before you can do this

Switch to single-user mode (Available in Sage 50 Premium Accounting and higher.)

How to Switch to Multi-User or Single-User Mode

To switch between multi-user and single-user modes:

  • Choose Single-User Mode or Select Multi-User Mode from the File menu in the Home window.
  • Click on Yes.

Steps to remove sales taxes that your company charges or pays

To remove a sales tax in Sage 50

Step 1: Access Settings

  1. Open the Sage 50 software and navigate to the Home window.
  2. Go to the Setup menu and choose Settings.

Step 2: Navigate to Tax Codes

  1. Within the Settings window, click on Company.
  2. Then select Sales Taxes and choose Tax Codes.

Step 3: Remove Tax Code from Sales Taxes

  1. Identify the tax code to be removed from the list.
  2. Select the tax code, then open the Edit menu and choose Remove Line.
  3. Confirm the removal by clicking OK.

Step 4: Navigate to Taxes

  1. In the navigation bar of the Settings window, click Taxes.

Step 5: Remove Tax from Taxable Tax List

  1. Find the tax in the Tax Charged column on any taxable tax list (Is it taxable?).
  2. Choose it and remove it by clicking Remove Line from the Properties menu.
  3. Click OK to confirm the removal.

Step 6: Remove Tax from Tax Column

  1. In the Tax column, choose the tax that is to be deducted.
  2. Open the Edit menu and choose Remove Line.
  3. Click OK to confirm the removal.

Note: The same terminology and actions may differ slightly depending on the version and configuration of the sage 50. For specific guidance it is recommended to consult Saga 50 Publications or seek assistance from their Sage support team.

Conclusion!

Hopefully, the above information and guidance will assist you in obtaining solutions and efficiently managing tax code-related issues. If you require additional assistance or are unable to update Sage tax codes manually, contact Sage for dependable solutions to all queries or glitches in your software.


Frequently Asked Questions(faqs)

How do I configure Sage 50’s sales tax authorities?

Select “Maintain| Sales Taxes…” from the Menu Bar to configure sales tax authorities and codes in Sage 50. This brings up the “Set Up Sales Taxes” window. This window displays options for creating, editing, deleting, and otherwise managing sales tax codes and agencies.

How do I get rid of a tax code in Sage?

Choose Settings from the Setup menu in the Home window. Open Company, then Sales Taxes, and finally Tax Codes. Click the tax code you want to remove in the Code column and press the Delete key. Click OK to close the Settings window.

How do I configure sales tax rates?

Control tax rates. You can use the sales tax when creating sales transactions if the Visible column has a checkmark in it. You cannot use it in a transaction if there isn’t a checkmark. Navigate to the Sales Tax Rates settings. Select Sales Taxes from the menu. Select New Tax Rate. Display Name. Give the sales tax a name here.

How do I include tax rates in a tax zone?

You can include rates once a tax zone has been created. Tax rates are the proportions at which goods and services are taxed. Within a zone, you can apply different tax rates. A set of city-based tax rates may need to be established in addition to a set of state-based tax rates, for instance, if you have a city zone.

How is Sage 50 accounting implemented?

Sage 50 Accounting automatically fills in the taxes related to a vendor or customer once you have set up your tax codes. This eliminates the need to enter the required taxes separately for a vendor or customer who is subject to multiple taxes.

How do I configure Sage 50’s sales tax authorities?

Select “Maintain| Sales Taxes…” from the Menu Bar to configure Sage 50’s sales tax authorities and codes. The “Set Up Sales Taxes” window is then displayed after doing this. The options for adding, modifying, removing, and otherwise maintaining sales tax codes and sales tax agencies are displayed in this window.

What steps must I take to add a sales tax code to a settlement period?

Select Tax > Indirect Taxes > Sales Tax > Sales Tax Codes from the Navigation Pane. Choose New. Type a value into the Sales tax code field. Enter a value in the Name field. To specify which Sales tax authority and at what intervals this sales tax needs to be reported and paid, open the pull-down list, and choose a Settlement period.

How do I define tax codes for purchases and sales?

Choose Financial Accounting Global Settings Tax on Sales/Purchases Calculation under Customizing for Financial Accounting to define the tax codes. Define Tax Codes for Sales and Purchases. Table T007A can also be viewed by using transaction FTXP. Use of SM31 is not recommended when changing tax codes as links to other tables are not kept up to date.

How do I configure a sales tax?

Sales tax on sales tax is what this is known as. You must create a sales tax code and add it to the appropriate sales tax groups to set up a sales tax on a sales tax. Click General Ledger> Setup > Sales tax > Sales tax codes. To create a sales tax code, select New. To make a sales tax code, select New. Please fill out the fields that need information. Sales tax codes can provide more details (form).

Is Sage 50 suitable for small companies?

Sage 50 is marketed as a user-friendly desktop accounting program for developing small businesses, but it can scale to handle accounting for large corporations. Accounts payable and accounts receivable, bill payment, and cash flow management are all part of standard accounting.

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