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Tax Settings

Books supports multi-jurisdiction tax configuration for US, Canadian, and international MSPs. Set up tax rates, manage tax agencies, track nexus, and generate filing reports.

Configuring Tax Rates​

  1. Navigate to Taxes > Tax Rates
  2. Click New Tax Rate
  3. Enter:
    • Name — Descriptive name (e.g., "California Sales Tax", "Ontario HST")
    • Rate — Percentage (e.g., 7.25%)
    • Tax Agency — Which agency you remit to
    • Jurisdiction — State, province, county, or city
    • Applies to — Products, services, or both
  4. Click Save

Compound Tax Rates​

For jurisdictions with multiple tax components (e.g., state + county + city):

  1. Create each component as a separate tax rate
  2. Apply multiple rates to invoice line items
  3. Books calculates each component separately and shows the breakdown on invoices

Tax Agencies​

Tax agencies are the entities you remit collected taxes to:

  1. Navigate to Taxes > Tax Agencies
  2. Click New Tax Agency
  3. Enter the agency name, filing frequency, and GL account
  4. Books tracks your tax liability balance per agency

Filing Frequency​

FrequencyTypical For
MonthlyHigh-volume businesses
QuarterlyMost MSPs
AnnuallyLow-volume or exempt businesses

Tax-Exempt Clients​

Mark clients as tax-exempt:

  1. Open the customer record under Accounts Receivable > Customers
  2. Enable the Tax Exempt flag
  3. Enter the exemption certificate number and expiration date
  4. Invoices for this customer will not include tax
⚠️Keep exemption certificates on file. If audited, you'll need proof of the exemption.

Tax on Invoice Line Items​

Tax is calculated per invoice line item:

  1. Each line item can have a tax rate assigned
  2. Tax is calculated on the line amount after any discount
  3. The invoice shows subtotal, tax total (broken down by rate), and grand total
  4. Tax amounts post to the Sales Tax Payable liability account

Tax Nexus​

Track where your business has tax obligations:

  1. Navigate to Taxes > Tax Nexus
  2. Add each jurisdiction where you have nexus (physical presence, economic nexus, etc.)
  3. Link the appropriate tax rates to each nexus jurisdiction
  4. Books applies the correct rate based on the customer's location
💡MSPs often have economic nexus in states where they have enough remote clients. Check your state's threshold — many are $100,000 in sales or 200 transactions.

US Sales Tax​

For US-based MSPs:

  • Create tax rates for each state/county/city where you have nexus
  • Most MSP services are not taxable in many states — check your state's rules
  • Hardware and product sales are generally taxable
  • File returns per your agency's schedule

Canadian HST/GST​

For Canadian MSPs:

ProvinceTaxRate
AlbertaGST only5%
British ColumbiaGST + PST5% + 7%
OntarioHST13%
QuebecGST + QST5% + 9.975%
OtherVariesSee CRA guidelines

Set up GST/HST as tax rates and assign them to your tax agency (CRA or Revenu Quebec).

UK/EU VAT​

For UK and EU MSPs:

  • Create VAT rates (standard, reduced, zero-rated)
  • Standard VAT: 20% (UK), varies by EU country
  • Track VAT collected and paid
  • Generate VAT return data under Tax Reports
  • Reverse charge mechanism for B2B cross-border services

Tax Reports​

Generate tax filing reports under Reports:

  • Tax Liability — Total tax collected per agency for a period
  • Tax Detail — Every taxable transaction with rate and amount
  • Tax Summary — Grouped by jurisdiction and agency

Export reports as CSV for import into tax filing software.

Tax Payments​

Record tax payments when you remit to agencies:

  1. Navigate to Taxes > Tax Payments
  2. Select the tax agency
  3. Enter the payment amount and date
  4. Books posts: DR Sales Tax Payable, CR Bank Account

Next Steps​