There are 3 stages of tax options- here’s what they mean and why.
1) The Project’s default tax rate: this is set so each new Proposal/Invoice on that project automatically uses that tax rate so it doesn’t have to be re-entered when creating a proposal/invoice.
The default tax rate for a Project is only used for ‘new’ proposals/invoices because old proposal/invoices need to be archival, in that, for example, 2 years ago the tax rate was different the old proposals/invoices need to keep the tax rates they had when made. This is why when updating a Project default tax rate it does not go back in time to update old proposal/invoice tax rates.
2) The Proposal/Invoice tax rate: this is for each particular proposal/invoice and is usually the same as the project’s tax rate, and is automatically entered when the proposal/invoice is created (so it doesn’t have to be entered manually).
However, some proposals/invoices may have a unique tax rate (like exempt 0%) for just that particular proposal/invoice- that’s why the tax rate is changeable on them. The tax rate on a proposal/invoice will use only Items/Work checked ‘tax’ for taxable for the tax calculations. This is because some Items/Work are taxable and some not, on the same proposal/invoice (like fabric for curtains being taxable but the labor or freight not).
3) The Items/Work don’t have a tax rate at all- they are merely checked ‘tax’ or ‘non’ (checked/unchecked). If an Item/Work is checked ‘tax’ it will be included in whatever proposal/invoice’s tax calculation it’s on (using that particular proposal/invoice tax rate). If an Item/Work is ‘non’ (unchecked for tax) it will not be included in any tax calculations. So there is no tax rate for Items/Work, only whether they are ‘taxable’ or not.
When creating an Item/Work and the SaleCode is selected DL will look to see if that SalesCode is to be ‘taxable.’ There are no tax rates (like 8.5% etc) attached to a SalesCode- only ‘tax’ or ‘non’ for taxable status). DL will automatically put that SalesCodes ‘tax’ or ‘non’ for the Item when it’s create.. This way the taxable status does’t have to be manually selected.
However, on specific Items you may occasionally need to change the ‘taxable’ status from the norm. For example, if a SalesCode ‘Accessories’ is checked ‘tax’ (in Settings/SalesCodes) then when making a new Item with ‘Accessories’ it will check them ‘tax’ by default. But on a specific Item you may not want to tax it even though has an ‘Accessories’ SalesCode. So you can change that specific Items taxable status to ‘non’ instead of ‘tax’ in the Proposal/Invoice the item is on. And that will only affect that specific Item.
So the breakdown is:
Project tax rate>Proposal/Invoice tax rate (can be changed though)>Item/Work taxable status (not a rate just checked/unchecked).