Table of Contents

Taxes Setup

Mitchell Paul-Soumis Updated by Mitchell Paul-Soumis

Tax Creation in Sonar

Tax creation requires 4 fields be filled out: Name, Application, Rate, and Type.

  • The name section is what appears on the invoice and on the account
  • The application indicates whether it should be a flat rate, or a percentage of the sum which is applied as taxes,
  • The rate is the amount (so 5 would be either 5 dollars or 5 percent depending on the application selection) and finally
  • The type picker allows you to set if it's global to every customer, or dependent on a certain geographical zone.

Once created, a Global Tax is done here - it's applied to all customer accounts in your instance. Geographical taxes will require additional configuration.

Geographical Taxes Extra configuration

When you create a Geographical Tax in Sonar, you then need to configure a Geo Tax Zone

Configuring a Geo Tax Zone will only tax the residents of that zone, and configuring the actual zone itself is very flexible. The only mandatory fields are the Name and the Rate.

If you enter multiple distinct fields, the Tax will only apply to individuals which meet all criteria

Multiple Service Zone configuration

While Sonar does support integration with Avalara for automated taxation, the software is designed to be robust enough to enable you to create multiple layers of taxation that appear on a line-by-line basis during transactions.

The Default Tax Rate (the RATE column) should be set to 0% when servicing multiple zones, as the rate set there will apply to serviced customers that fall outside the set zones.

When you provide service to customers in multiple cities, counties, or states, you will need to ensure you have all the layers built. Rate-building occurs on a size basis, starting from the broadest service area to the smallest. As you can see below, the taxes were built in the following order:

  1. State Tax
  2. County Tax
  3. City Tax
If you have multiple state level taxes (such as a technology tax), these secondary taxes should be entered in as a unique Geographical Tax. See SCIENTIFIC & CULTURAL FAC in the image above

The way this system works together allows you to nest multiple Geo Tax Zones within one layer, such as in the case of distinct cities within Colorado:

By nesting these cities under a single Geographical Tax, you minimize not only the number of items, but the number of taxes applied to a service.

Finally, with the taxes configured in this nested manner you and your customers will be able to see all taxes leveraged against the service as it's charged and invoiced.

On the customer's transactions:

Statement Example:

invoice_7.pdf

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Billing Defaults

General Ledger Codes: Overview

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