Taxes Setup

(Accessed through Maintenance / Park Setup / Taxes.)

Proper tax calculation and ease of reporting depends greatly on the way your set up your Transaction Categories in the Pick Lists, as well as properly choosing tax categories and properly configuring your Rates and Inventory Items (if the POS option is used), as well as properly entering manual Charges.  All of this is discussed below.

Tax Categories

The Taxes setup is a simple dialog showing entry for 5 tax rates.  For each rate, simply select a Transaction Category to use for it (each tax rate must have its own transaction category), enter the rate, and enter a description if desired (a description is optional, it's only seen on this dialog anyway).  Tax rates defined here are used for Rates and also for manually entering taxes on Transaction dialogs.

Important: The Category selected for Taxes should not be the category you'll use for the Charges.  Don't select "Daily Rate" or "Giftshop" as a tax category, for instance.  The Tax category should be a category only used for the tax itself, like "Sales Tax" or "GST".

By default, you may see a couple tax rates already defined when you set up your database.  Feel free to change these.  To disable a tax rate, simply select the "blank" category at the top of the selection drop-down list.  Then it will no longer show up wherever tax rates are used.

If you don't have a category set up for each tax rate you need to define, or if you want to rename them to reflect your local taxes, go to the Pick Lists and add appropriate Transaction Categories first.  The order or position of the categories in the Transaction Categories pick list doesn't matter.  These categories will allow you to create reports showing the amount of each tax collected, and will also allow the Transactions dialog to correctly calculate the tax.

Important -- Once you set up Rates, never change the position of these tax categories.  This is because the Rates are defined as being taxable by tax rate number (1, 2, 3, 4 or 5), so if you switch them around then you will have to change every Rate definition.  This will also affect Point of Sale transactions and inventory items, so it's best to just never change the positions.

Tax Rate

Here you will just enter the current tax rate.  Note that the tax rate is a multiplier, not a percentage.  Thus, 6.25% should be entered as .0625.  If you need to change a tax rate later, see the topic below for Changing Tax Rates.

Categories for Charges, Taxable and Non-Taxable

Important -- There is no specific indication or tracking of which of your Transactions Categories (or Charges entered) are taxable vs. non-taxable.  Therefore it's very important for proper reporting of taxable sales that you set up appropriate Transaction Categories so that the standard reports can be used to determine the taxable vs non-taxable sales (for each tax rate).  If you have not already done so, you should do that before finishing the Taxes setup.

A couple specific examples:

1. If you have a "Store" category, but some store items are taxable and some are not (or some are taxed at a local rate only while others are taxed at the full rate), then you should have separate categories -- for instance "Store - Food" and "Store - Non-food", or "Store - Taxable" and "Store - Non-taxable".  Then you can use the appropriate category for each item sold, and they will be reported accordingly.  Note also that in the local vs full tax situation, you should have separate Tax Rate entries, one for Local Tax only and one for the full Sales Tax rate.

2. If your location waives taxes for long-term (1 month or more) stays, then you may think all you need to do is have the normal Daily Rate, Weekly Rate and Monthly Rate categories, and tax only the Daily and Weekly Rates.  That's a good start, but you also need to be aware that if they don't stay an even number of months then a long-term stay can also include some Weekly and/or Daily charges, which should not be taxed in this case.  One way to do this is to make sure your Rates Setup has separate Rate definitions to be used for the extra weeks/days for a month-plus reservation, and in that rate definition use either the Monthly Rate category for the charge (even though it may only be a charge for 1 day), or create a separate Daily Pro-rate category to be used.

Adding Taxes to Charges

So far this discussion on categories is only referring to reporting issues, e.g. for quarterly sales tax reporting  (See below for more reporting information).  This has nothing to do with the actual tax rate used when the charges are added.  The method taxes are determined and/or added depends on how the Charges are added.

1. When adding pre-defined Rates, whether adding through Select Rates or Auto-Rates, taxes are added automatically according to the auto-tax selected in the Rate definitions.

2. If using the Point of Sale option, when adding Inventory items through POS Sales Entry, taxes are added automatically according to the auto-tax selected in the Inventory Item Setup.

3. When adding Charges or Discounts manually, using the Charge button on a Transactions entry dialog, then you will see a list of the tax rates and need to make sure the appropriate tax rates are selected.  Some taxes may be automatically selected according to the "Default" options selected in Taxes Setup:

The "Default?" field in the tax definitions indicates which tax or taxes will be selected by default when adding manual charges.  Note that this doesn't force which tax is used (it can be changed if necessary when making the sale), it simply saves time when adding charges by pre-selecting the tax rates that may be applicable.

If the "Default?" option is checked, you can also click the corresponding Categories button select which Transaction Categories this tax should be the default for.  Thus you can specify that a Hotel Tax is the default for your site rental categories, and Sales Tax is the default for merchandise categories.  If multiple taxes apply to the same categories, that's fine -- just select the same categories for both.  Note that if no categories are selected, then it's assumed to be the default for ALL categories.

4. Finally, you can add Taxes manually in the Transactions dialog, using the Tax button.  This is a last resort, if for some reason you notice that taxes were not automatically added when using one of the methods above.

Discounts -- Keep in mind that most Discounts are pre-tax, so those need to be subtracted from the taxable Charges for calculate the amount taxed.  Again, if some discounts apply to non-taxed categories, then you can make a separate category for non-taxed discounts.  Or better yet, avoid using the generic "Discount" category for discounts and always select the appropriate category when a discount is entered (or set up in a Rate), e.g. use the Daily rate category if it's a discount off of the daily rate.

Reporting

Most businesses need to fill out a quarterly sales tax report for your state (or similar reporting for other taxes).  For these reports you need to find the amount of sales tax collected and/or the amount of sales revenue that was taxed.

Assuming that you're using the tax categories and auto-tax calculations as designed and explained above (as opposed to including tax in your prices to make them even dollar amounts), getting the amount of sales tax collected is easy:

- Click on the Transactions tab view.

- Click the "Summary Options" button (if you don't see Summary Options, check the Summarize box first),

- If you report based on when they're collected (paid to you), e.g. Cash-basis, click the "Receipts by Category" button under Quick Reports.  

- Otherwise, if you need to report based on when they are charged to the customer (whether paid or not), e.g. Accrual basis, click the "Charges by Category" button.

- Click "Summary Options" again.

- Select the "Quarterly" option in the Summarize period group (or 'Monthly", as appropriate).

- Click the "Filter..." button and select the appropriate From and To dates for the quarter or month, then click OK.

- Click OK again.

Along with all other Transaction Categories, this will show the actual amount of tax income for the quarter, for each tax category you use (e.g. Sales Tax, Hotel Tax, etc).  However, see below for proper Taxable Sales calculation.

IMPORTANT: Do NOT use the "Taxes by Tax Category" report unless your accounting is accrual-based and tax liability is according to when you take the reservation, or if you're entering (or auto-calculating) charges/taxes only when the customer checks in or pays in full.  Like "Charges by Category", "Taxes by Tax Category" reports tax amounts as of when they're entered in Campground Master -- so unless you're using Campground Master in the "recommended" way (entering no charges until the customer checks in and/or pays), this will show taxes sooner than they're due.  If your accounting is cash-based and you want to report tax as it's collected (paid), use the "Receipts by Category" report in the procedures above.

Taxable Sales

Now you will need to use the report above get the actual amount of taxable vs non-taxable sales.  Campground Master doesn't specifically flag each charge transaction as to whether it's taxable or not, so getting the proper amount of sales depends on how things were set up.

1. Add up the taxable categories -- As explained, this depends on having your Transaction Categories appropriately set up so you can tell exactly which categories are taxable vs non-taxable.  Given this proper setup and usage of the categories, you can simply add up the categories for each value.

2. Reverse-calculate it from the tax categories, e.g. "Sales Tax" -- for instance if your tax rate is 5% and the tax collected is $100, then the amount of taxable sales would be $100 / .05 = $2000.

3. Reverse-calculate it from the sales categories -- If you're including taxes in the sales categories themselves (e.g. if you set up your Rates to include taxes so they are even-dollars amounts, and/or not show taxes separately on receipts), then you will have to calculate it from the total sales in the taxable categories.  For instance if total taxable sales is $2000 and your rate is 5%, then divide by 1.05:  $2000 / 1.05 = $1904.76 taxable sales.

Note that regardless of the method used, expect a small difference between the expected tax on the taxable sales and the actual tax collected.  This is expected due to rounding issues on individual sales.  If there is a large difference, however, then it's due to problems with your taxes setup or categories setup, or mistakes in sales entry.

Changing Tax Rates

Any time the tax rate changes, you could just come back here to Taxes Setup and change the rate -- however note that this will take effect immediately, and only for new taxes added from here on. Note that if you're using Auto-rates, this could cause previously-charged reservations to be recalculate at the new tax rate if you do anything with them (including just checking them in), so you would need to disable automatic recalculation for those that should not be affected (in Reservation Details).

However, if you want the new tax to apply to any reservation that arrives on a set date (even if they already paid a deposit or you already entered their charges, so it adds the extra tax when they check in), then you would need to add a separate category for the new tax and set up a complete separate set of Rate definitions.  

First of all, resist the temptation to just rename or delete the previous tax categories or tax rate entries -- you need those for prior reporting and to keep existing reservations from becoming corrupted.  What you need to do is add a new Tax rate, and then enable that for your Rates.

1. Go to Maintenance / Pick Lists / Transaction Categories.  Check "Allow editing...", and Add a new record for the new tax rate, e.g. "Sales Tax 2020".

2. Add the new rate as a new tax under Park Setup / Taxes.  Don't replace the others, just use the next empty slot.  You probably don't want to check the "Default" option until the day it takes effect.  This won't affect the Rates, but if you add Charges or Discounts manually, it determines whether that tax option is selected by default -- so change the Default selections only after the new tax rate is in effect.

3. If you also have Rates set up, you need to create new Rates that will apply on the appropriate arrival date.  In Rates Setup, select each rate definition that will change (you can use Ctrl-click to select many at once), and click "Copy Selected Rates".  Now Edit each rate definition -- in each of the old rates, put the old range like "1/1/18 to 12/31/18" in the Season Dates Applicable field.  In each of the new rates, put "1/1/20 to 12/31/20" (and change the "Each" amount of the Charge, etc.).  Of course the dates will be different if your Rates already have season dates, adjust accordingly

Note that this will make the new rates apply according to the Reservation's dates (dates of stay), regardless of when they made the reservation.  If instead you want to apply the new rates according to when they MAKE the reservation (e.g. existing reservations get the old rate, but anyone calling after a certain date gets the new rate), then a different method is needed.  See the newsletter article on Grandfathering rates (see newsletter 39).

4. If you also use the Point of Sale, you will need to go through each and every Inventory Item and select the new rate on the date of change.  (You could also take a shortcut an change the old tax rate to the new percentage on that day, but that runs the risk of causing some existing reservations to be recalculated at the new rate, as mentioned above.)