Understanding Sales Tax in Club Caddie

Article Contents:
This article reviews the basics of sales tax and how it impacts your facility. Learn how sales tax is calculated in Club Caddie and why it is calculated that way.

IMPORTANT: Sales tax on this report is an estimate based on how you have configured the business’s tax rates in Club Caddie’s settings. For official filings, always verify current local rates, then manually calculate tax using net taxable and non-taxable revenues. Be aware that tax laws can change at any time and you should contact a tax professional for specific tax advice regarding your business.

Step 1: Sales Tax in Club Caddie

Tax figures in reporting are estimates based on how you have set up the tax rates and assignments in your Club Caddie account. Tax laws can change at any time, so it is important to verify local rates and manually calculate tax due before making any official filings. We recommend contacting a tax professional for specific tax advice regarding your business.

Step 2: How Tax is Calculated

Sales tax is currently calculated at the item-level using the tax rates you have configured in your inventory management settings. At the register, the relevant tax rate is applied individually to each item and rounded to the nearest penny.

Step 3: Calculation Examples

Consider the examples below of a sale with two items, each priced at $5.50 and charged a single 9% tax rate.

Item-Level Tax (Current Calculation Method)

Item 1: $5.50, 9% tax
Tax on item = $5.50 x 0.09 = $0.495

Item’s tax is rounded to $0.50

Item 2: $5.51, 9% tax
Tax on item = $5.51 x 0.09 = $0.4959
Item’s tax is rounded to $0.50

Total tax collected on sale = $1.00

 

Alternative - Transaction-Level Tax

Item 1: $5.50, 9% tax

Item 2: $5.50, 9% tax

Subtotal of tax rate = $5.50 + $5.50 = $11.00

Subtotal’s tax = $11.00 x 0.09 = $0.99

Total tax collected on sale = $0.99

 

Item-Level vs. Transaction-Level Tax

Item-level tax makes it possible to return individual items, calculate taxable and non-taxable sales by tax rate, and produce certain reporting features.

In the example above, sales tax would be $0.99 if calculated at the transaction- level. If one item was returned, how much tax would need to be refunded: $0.49 or $0.50? Which item gets the extra penny? With transaction-level tax, there can be many of these “extra pennies” randomly assigned to items. When each sold item’s tax is summed, you may end up with a different total than what was actually collected at the register.

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