Settings : How Sales Tax Is Calculated and How to Price for an Even Total

Overview

Club Caddie adds sales tax on top of the price you enter. Tax is worked out one unit at a time and one tax at a time: the price of one unit times each tax rate, rounded to the nearest cent, then multiplied by the quantity.

So when you want a customer to pay an even amount, like $5.00 or $60.00, you enter the pre-tax price that gets you there. This article shows how to do that for a single item and for a rack rate that mixes taxed and untaxed items. It also covers how to check a rate's pieces when its total isn't the one you planned, and how to tell whether service charges are taxed. The examples use a 7% tax rate; the steps are the same for any rate.

Before you start

Know which tax applies to what you're pricing:

• Inventory items (merchandise, food and beverage, cart fees) use the item's own Tax Group.
• The green fee portion of a rack rate uses the green fee item's own Tax Group. When a rate creates a new green fee item for you, that item starts with the Default Green Fee Tax Type / Group from Tee Sheet Settings.
• Other items built into a rack rate each use their own Tax Group.
• Service charges are covered in the last section.

Tax rates and tax groups are set up in Settings → Tax Management. See Settings : Tax Management Overview for setup.

Price an item so the total comes out even

This works for any item you sell: a drink, a snack, a sleeve of balls, a range bucket.

1. Decide what the customer should pay, for example $5.00.
2. Divide it by 1 plus your tax rate. At 7%, $5.00 ÷ 1.07 = $4.673. If the item's tax group holds more than one tax, use the combined rate.
3. Round to the nearest cent and enter that as the item's price: $4.67.
4. Check it: $4.67 × 7% = $0.327, which rounds to $0.33. $4.67 + $0.33 = $5.00.
5. If the check misses, try one cent higher or lower. A few totals can't be reached exactly: at 7%, a $11.21 price totals $11.99 and a $11.22 price totals $12.01. Pick the one that lands closest, or choose a different target.

Because tax is rounded on each unit, an item priced this way stays even at any quantity when it sells at full price. Four of them collect $0.33 × 4 = $1.32 in tax, for a total of $20.00.

Price a rack rate with a taxed and an untaxed item

When you link inventory items to a rack rate, Club Caddie splits the rate's price across them. The cart fee and any other items get the price set for them in the combo, and the green fee gets whatever is left. Each piece is then taxed with its own tax group, so you back the tax out of the taxed pieces only.

In this example, golfers should pay $60.00. The cart fee is $20.00 with no tax, and the green fee is taxed at 7%.

1. Decide what the customer should pay: $60.00.
2. Subtract the untaxed pieces. $60.00 minus the $20.00 cart fee leaves $40.00 for the green fee, tax included.
3. Divide that by 1 plus the tax rate and round to the cent. $40.00 ÷ 1.07 = $37.383, so the green fee is $37.38, and its tax is $2.62.
4. Add the untaxed pieces back: $37.38 + $20.00 = $57.38. Go to Settings → RACK Rate Management, click EDIT on the rate, and enter this in Rate ($).
5. Click Next. Check that the rate is linked to the right combo under Link Rate to Existing Green Fee / Cart Fee Combo Item, and that BUNDLED ITEMS shows each item's price.
   
6. Click Save.
7. Book a test tee time on the rate with Send Confirmation Email and Send Confirmation Text unchecked and Turn Where set, then check it in. At the register, confirm the total: $37.38 + $2.62 + $20.00 = $60.00. Then delete the line without taking payment and cancel the test booking.
   

Backing 7% out of the full $60.00 instead would set the rate at $56.07, and the customer would pay $58.59, because the cart fee carries no tax. If a rate has several taxed items, or items on different tax groups, back the tax out of each one separately.

Tips for a rate's items

• Set the green fee item's sub type to GREEN FEES. The rate can only find the item as a green fee when this is set. You can check it in the rate's Inventory Sub Type column. If you change it on an item that's already in a combo, remove the item from the combo and add it back.
• Name combos clearly. Adding "Combo" to a combo's name makes the right one easy to pick in Item Search.
• Reuse one combo across rates. Set each rate's own price in Rate ($). The green fee absorbs the difference, so the other items keep their combo prices.
• Combo prices can differ from regular prices, as long as they aren't below the item's floor price. An item's cost is used for margin and inventory reporting. On its own, it doesn't change what the customer pays.

Land a rate on the total you planned

If a rate rings up a few cents above or below the total you planned, check each piece of it.

1. Go to Settings → RACK Rate Management, click EDIT on the rate, and click Next. Note each item under BUNDLED ITEMS and its price.
2. Open each of those items in your inventory and check which tax group it's on. A cart fee you expected to be untaxed may be on a tax group that charges tax, or the green fee may be on a different group than you planned.
3. If your tax rate changed and you set up a new tax group for it, make sure each item is on the new group. Each item is taxed with the tax group it's on, so an item left on the old group still charges the old rate.
4. Move any item that's on the wrong group to the right one and save it.
5. Book a new test tee time on the rate and ring it up, the same way as step 7 in the section above. Use a new booking, because existing tee times keep the price they were booked with.
6. If every tax group is right and the new booking is still a cent or two off, it's rounding. Each piece of a rate is rounded on its own, so the pieces can add up to a cent or two more or less than your math on the full rate. Raise or lower Rate ($) by a cent and ring up a new booking again. Contact support for help landing on the total you want.

Check whether a service charge is taxed

A service charge is worked out per unit and rounded to the cent, the same way tax is. Whether the service charge is also taxed is one register setting.

1. Go to Settings → Register Settings.
2. On the Register tab, find Tax on Service Charge :. When it's checked, service charges are taxed.
3. Check Inventory Service Charge Tax Group. Club Caddie taxes a service charge with the service charge tax group set on the item, and uses this one when the item doesn't have one.
   

For example, here is a $100.00 item with a 20% service charge and 7% tax, with Tax on Service Charge : checked:

• Service charge: $100.00 × 20% = $20.00
• Tax on the item: $100.00 × 7% = $7.00
• Tax on the service charge: $20.00 × 7% = $1.40
• The customer pays $128.40

With the setting unchecked, the same sale totals $127.00.

Common Questions

Can I enter prices with tax already included?

Prices are entered before tax, and Club Caddie adds tax at the register. Use the steps in "Price an item so the total comes out even" to find the pre-tax price for the total you want.

Why does Club Caddie calculate tax per unit instead of on the subtotal?

Club Caddie rounds tax on each unit, not on the subtotal, so the two can differ by a few cents, and by more on large quantities. For example, four items at $4.67 collect $1.32 in tax, while 7% of the $18.68 subtotal is $1.31. See General : Understanding Sales Tax in Club Caddie for why tax is calculated item by item.

What if my tax group has more than one tax, like a state tax and a local tax?

Each tax is rounded on its own and then added together. Use the combined rate when you back the tax out of a price.

Do existing tee times change when I change a rate?

No. Tee times keep the price they were booked with, including bookings made online. New bookings use the new price.

What does the tax percentage on a sales tax report show?

The report divides the tax collected by sales. Because each unit is rounded to the cent, low-priced items can collect a fraction of a cent more or less than the exact rate. For example, $0.33 on a $4.67 item works out to 7.07%. Your configured rate hasn't changed.

Can Club Caddie round totals up to the nearest dollar?

Totals follow your prices to the cent. To get whole-dollar totals, set prices with the steps above and ring up each rate once to confirm its total. For cash payments, see Settings : Cash Rounding.

Our tax rate changed. What do I do?

See Settings : How to Update Sales Tax Percentages.