About taxes
This article covers how taxes work and are calculated in OrderPin POS System, where to find reporting on the taxes you collect at the OrderPin POS and a country-specific overview of general tax information. You can think of taxes here as sales tax, value-added tax (VAT), goods and services tax (GST), or any other tax your business charges your customers.
In this article:
Important: Tax laws are different in every region and can change at any time. Consult a tax professional for specific advice regarding your region.
How taxes work in OrderPin POS System
Review the bullets below to learn how taxes function in OrderPin POS System before setting them up. Set up taxes in the Back Office to ensure the correct sales tax, VAT, or GST amount will be charged at the POS for every order.
- In OrderPin POS System, tax rates and tax settings control how much and when tax is charged.
- Tax rates are individual tax percentages. For example, a 5% tax rate could represent the sales tax in your state or the value-added tax (VAT) in your country.
- OrderPin POS System provides both tax-exclusive(product prices exclude tax) and tax-inclusive(product prices include tax) based on the country selected when setting up the account.
How tax is calculated at the Cloud POS
The OrderPin POS System calculates taxes for orders based on how you set up tax rates and calculate rules in the Back Office. An order's actual tax amount will vary depending on whether your account is tax-exclusive or tax-inclusive and how payments are rounded.
Tax include/exclude in the product price
- For tax-exclusive accounts(product prices exclude tax), tax is added on top of the order total.
1. Item prices are totaled for each tax rate used on the order, resulting in the taxable amount for each rate.
For example, an order contains 4 items: 2 taxed at 5.5% (priced at $7 and $10) and 2 taxed at 8.0% (priced at $15 and $24).
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- $ 7.00 + $10.00 = $17.00 will be taxed at 5.5%
- $15.00 + $24.00 = $39.00 will be taxed at 8.0%
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2. Each taxable amount from Step 1 is multiplied by the tax rate itself. The result is rounded to the nearest hundredth, giving the tax amount that will be charged for each rate.
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- $17.00 x 5.5% = $0.935, rounded to $0.94
- $39.00 x 8.0%= $3.12, no rounding needed
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3. The tax amounts for each tax rate are added together, resulting in the total tax for the order.
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- $0.94 + $3.12 = $4.06 total tax on the order
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- For tax-inclusive accounts(product prices include tax), tax is pulled out of the order total.
1. Item prices are totaled for each tax rate used on the order, resulting in the tax-inclusive total for each set of items.
For example, an order contains 4 items: 2 taxed at 5.5% (priced at $7 and $10) and 2 taxed at 8.0% (priced at $15 and $24).
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- $ 7.00 + $10.00 = $17.00 (includes 5.5% tax)
- $15.00 + $24.00 = $39.00 (includes 8.0% tax)
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2. Each tax-inclusive total from step 1 is divided by one plus the tax rate. The result is rounded to the nearest hundredth, giving the pre-tax amount for each set of items.
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- $17.00 ÷ (100%+5.5%) = $16.114, rounded to $16.11
- $39.00 ÷ (100%+8.0%) = $38.690, rounded to $38.69
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3. The pre-tax amounts from step 2 are added together, and the result is subtracted from the order total. This results in the total tax on the order.
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- $16.11 + $38.69 = $54.80 total pre-tax order amount
- $17.00 + $39.00 - $54.80 = $1.20 total tax on the order
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Tax can/cannot be discounted
How to calculate the tax on the discounted product price? The OrderPin POS System also provides two calculation methods.
- Under the premise that tax cannot be discounted, order taxes are calculated based on the original price of the product, and the total order amount is equal to the sum of the discounted price of the product and taxes.
1. Total the original price of the item based on each tax rate used in the discounted order to arrive at the taxable amount for each tax rate.
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- For example, an order with a 10% discount contains 4 items: 2 taxed at 5.5% (priced at $7 and $10) and 2 taxed at 8.0% (priced at $15 and $24).
- $ 7.00 + $10.00 = $17.00 will be taxed at 5.5%
- $15.00 + $24.00 = $39.00 will be taxed at 8.0%
- the exact sales amount is ($17 + $ 39) * (1-10%) = $50.40
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2. Multiply each taxable amount (original price of the product) from step 1 by the tax rate itself. Round the result to the nearest hundred to get the tax amount to be collected for each tax rate.
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- $17.00 x 5.5% = $0.935, rounded to $0.94
- $39.00 x 8.0%= $3.12, no rounding needed
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3. Add the tax amount for each tax rate and add it to the discounted product price to get the total tax amount for the order.
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- $0.94 + $3.12 = $4.06 total tax on the order
- $4.06 + $50.40 = $54.46 total amount on the order
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- On the premise that tax can be discounted, order taxes are based on the discounted price of the goods, and the total order amount is equal to the discounted price of the goods plus the corresponding discounted taxes.
1. Based on the discount, determine the discounted price of the product and then calculate the taxable amount of the discounted product based on each tax rate used in the order.
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- For example, an order with a 10% discount contains 4 items: 2 taxed at 5.5% (priced at $7 and $10) and 2 taxed at 8.0% (priced at $15 and $24).
- ($7.00 + $10.00) * (1 - 10%) = $15.30 will be taxed at 5.5%
- ($15.00 + $24.00) * (1 - 10%) = $35.10 will be taxed at 8.0%
- the exact sales amount is ($17.00 + $ 39.00) * (1-10%) = $50.40
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2. Multiply each taxable amount (original price of the product) from step 1 by the tax rate itself. Round the result to the nearest hundred to get the tax amount to be collected for each tax rate.
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- $15.30 x 5.5% = $0.842, rounded to $0.84
- $35.10 x 8.0%= $2.808, rounded to $2.81
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3. Add the tax amount for each tax rate and add it to the discounted product price to get the total tax amount for the order.
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- $0.84 + $2.81 = $3.65 total tax on the order
- $3.65 + $50.40 = $54.05 total amount on the order
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Where to find tax reporting
Tax reporting is available both in the Back Office and the OrderPin POS:
- In the Back Office, you can directly view the tax report online. Here, you can view the tax data of each order and the corresponding employees according to order type, branch, and period. Of course, you can also directly export the report to your local. Please refer to our Report topic.
- On the OrderPin POS System, you can also directly view the online tax reports of different branches at different times.