Web Suite handles most of the tax rules used in various countries – taxes on time and expense entry line items, taxes on invoiced labor and expense, and taxes on taxes. Web Suite provides different methods to tax services (time entries) and expenses (expense entries). You can specify three different tax rates –Tax 1, Tax 2 and Tax 3—per entry. Additionally, you can apply a fourth tax rate (Main Service Tax or Main Expense Tax) to the total when invoicing.
At the first level, there are three item taxes, Tax 1, Tax 2 and Tax 3. Web Suite sums the rates and applies the total percentage to the time or expense entry’s pre-tax bill amount, then adds the resulting tax to the bill amount. You can modify these tax rates during time and expense entry (with the proper security permissions).
At the second level, Web Suite uses Main Service Tax (MST) and Main Expense Tax (MET) to tax total invoiced labor/services and total invoiced expenses, respectively. You might know them as Value Added Tax (VAT) in some countries like U.K. or Goods and Services Tax (GST) in others like Canada or Harmonized Sales Tax (HST). Item taxes are in addition to any Main Tax applied to invoiced activities.
Web Suite also allows you to specify how much taxes you paid as part of that expense amount. This Purchase Tax is very important for tracking of GST, HST or VAT. It enables you to know how much tax the company paid, how much tax the company collected from the client and the net balance. For example, if you paid $110 for lunch with a client, this amount includes the VAT or GST of $10. To enter the net amount into Web Suite, you could make two separate entries—the pre-tax amount of $100 and the VAT/GST portion of $10. Alternatively, you can specify the purchase tax rate for an expense and Web Suite does the math for you. You can run your VAT or GST reports that show the total taxes paid by your company and total taxes collected. The Net is what you owe to the tax authority.
When generating billing records, Billing Review or Manual Invoice checks MST and MET for the project being billed. If Web Suite finds them, it calculates the required tax amount to carry to an invoice. The Tax 1, 2 and 3 amount is included in the contract amount but the main tax is not.