Setting Up Sales Tax In Aspire

Here's your all-in-one guide to getting Sales Tax setup in Aspire!

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Written by Aspire Software
Updated over a week ago

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How Does Aspire Manage Sales Tax?

Aspire helps companies ensure that sales taxes are collected from their customers accurately. This is done by setting up Tax Jurisdictions (that contain Tax Entities) and then connecting each property with the appropriate Tax Jurisdiction based on the property's location.

🌟 Aspire uses the Tax Jurisdictions and their assignment to properties to automatically calculate tax on jobs performed for customers!

Services are also set up to specify which types of items (material, labor, subcontractor or other) should be taxed in each state that a company does business.

The basic steps for setting up Sales Tax in Aspire are:

  1. Set up tax entities and tax jurisdictions

  2. Add taxable items to services

    1. For primary state of operation

    2. For other states in which you operate

  3. Add tax jurisdictions to properties

This article discusses these concepts, provides best practices for setting up Aspire to manage your sales tax, and provides detailed instructions for each of the steps above.

Overview of Tax Jurisdictions and Tax Entities

Tax Jurisdictions are defined geographical areas with specific sales tax rules. Each tax jurisdiction is made up of one or more Tax Entities. Each Tax Entity requires a certain percentage of sales tax to be collected for the sale of goods or services.

Below shows the relationship between a Tax Jurisdiction and a Tax Entity:

  • Tax Jurisdiction

    • State Tax Entity

    • County Tax Entity

    • City Tax Entity

For example, a property in a certain city may have three different sales tax percentages for:

  1. the state

  2. the county

  3. the city

Each of these entities, the state, the county, and the city, would be created and then assigned to the Tax Jurisdiction.

The same Tax Entity can be used in multiple Tax Jurisdictions. If you have the same state for multiple cities where work is performed, you would just create the state entity once and then apply it to multiple tax jurisdictions that are located in that state.

📌 Note: All properties in your Aspire system must have a tax jurisdiction, regardless of whether you charge sales tax or not. However, the setup for companies that are not required to collect income tax is very simple (click here to skip to this section).

How Tax Jurisdiction Sales Tax is Calculated

The total tax for the Jurisdiction is based on the sum of the sales tax for each of the entities in the Jurisdiction.

For Example:

Examples of Tax Entity and Tax Jurisdictions

Suppose that in the state of Missouri, businesses are required to charge sales tax. As well, Callaway County also charges a specific sales tax. Individual towns in Callaway County charge sales tax, too.

A company doing work in the cities of Vandiver and Mexico might set up Tax Jurisdictions as shown in the chart:

However, in Boone County, individual towns do not charge sales tax. The Tax Jurisdiction might look like this:

In the above examples, there is one Missouri entity, but it is referenced in three different Jurisdictions: Vandiver, Mexico and Boone County.

Similarly, there is one Callaway entity which is referenced in two different Jurisdictions: Vandiver and Mexico.

Jurisdictions in Aspire When Not Collecting Sales Tax

In Aspire, every Tax Jurisdiction must have at least one Tax Entity. Companies who are not required to collect sales tax from their customers, will likely have a single Tax Jurisdiction called something like Exempt Jurisdiction that contains a single Tax Entity that is called something like Exempt Entity.

The Tax Entity would be created first with a 0% Sales Tax Rate and the Tax Jurisdiction would be created with the one Tax Entity. Then, all properties would be assigned to the “Exempt Jurisdiction”.

Creating Tax Entities and Tax Jurisdictions in Aspire

Before creating your tax jurisdictions, consider all the tax entities that will need to be created first. Since tax jurisdictions cannot be create without tax entities, it is important then to create the tax entities first then create the tax jurisdictions.

🧠 When determining the tax entities needing to be created, start with the most general tax entities first, such as the states your company operates in!

Creating a New Tax Entity

  1. Determine the tax entities in all locations your company currently performs work.

  2. Based on the tax entities you have identified, set up your tax entities by going to Administration ➡️ Application tab ➡️ Lists subsection

  3. Click Select a List and select Tax Entity. (Tax Jurisdiction is located just beneath which will be shown later)

  4. Existing Tax Entities will show. To create a new Tax Entity, select the blue New button.

  5. Enter the name of the Tax Entity along with the associated Tax Percent. Be as specific as possible with your Tax Entity name. Your tax percent is given by your local, county, or state government.

  6. Select Save.

Repeat steps 4 through 6, until all of the necessary tax entities have been entered.

Creating a New Tax Jurisdiction

🧠 After creating the tax entities, you'll then need to create Tax Jurisdictions.

  1. If not already in Administration, navigate to Tax Jurisdictions by going to Administration ➡️ Application tab ➡️ Lists subsection

  2. Click Select a List and select Tax Jurisdiction. Existing Tax Jurisdictions will show.

  3. To create a new Tax Jurisdiction, select the blue New button.

  4. A new screen will appear. Enter the Tax Jurisdiction Name.

  5. Click Save. This will take you back to the Tax Jurisdiction list. Next, we'll need to add the tax entities to the newly created tax jurisdiction.

  6. On the main screen of the Tax Jurisdiction list, select the 3 vertical dots of the Tax Jurisdiction that needs to have the entities added. Select Edit Tax Entity.

  7. You will be taken to the Jurisdiction Entities screen. Select the blue New button and a drop down menu on the left will appear.

    📌 Note: You can click the New button more than once at a time for each entity that will need to be added.

  8. Click the Select One dropdown and select the appropriate Tax Entities for this Tax Jurisdiction. The newest created Tax Entities will be at the bottom of the list.

  9. When all the necessary Tax Entities have been assigned, select Save in the upper right. This will take you back to the Tax Jurisdiction list.

Repeat steps 3 through 9, until all of the necessary tax entities have been assigned to a Tax Jurisdiction.

Choosing What Item Types Are Taxable for A Service

After you have have created the needed Sales Tax Entities, you can then specify for each service what types of items are taxable in each state you operate in (such as materials, labor, subcontract, or other).

You can specify taxable service types as you initially set up your services, or you can go through your service catalog later to specify taxable service types.

In either case, this setup is done at the Service level, because some states have different sales tax requirements depending on the service.

For each taxable service, perform the following steps:

  1. Go to Administration ➡️ Estimating ➡️ Service Catalog

  2. All existing services will appear. Select a service from the Service Catalog to display the specific service to add the taxable items to.

  3. The service's record will show. To specify what type of items are taxable in the primary state of operation for the particular service being updated, select the drop down menu under Taxable Items.

  4. Select the items that are taxable for this service. You have the ability to select more than one.

  5. To specify what type of items are taxable in states that are not your primary state of operation, click on the three dot menu at the top right corner of the page and then select Service Tax Overrides.

  6. For each state that you do business in other than your primary state, click the New button in the upper right to add a line, and then check the box for each service type that is taxable in that state.

  7. When complete, click the green Save button. This will take back to the service.

🧠 To make sure your changes will save on the primary tax override, it may be best to setup the Service Tax Overrides of the other states your company services first, click Save, use the back arrow of your browser, and then put the primary Tax Override on the Service.

Adding Tax Jurisdictions to Properties

⚠️ A Tax Jurisdiction should be added to all properties even if you are not required to charge sales tax.

There are two ways to add the Tax Jurisdiction to a property:

  1. Individually: By clicking into and editing the property record

  2. In Bulk: By selecting Properties and applying the same Tax Jurisdiction at once through Bulk Actions.

Adding a Tax Jurisdiction to a Property

  1. From the home screen, click the Properties module from the blue side panel.

  2. Search and select the property you would like to add the Tax Jurisdiction to.

  3. To add, we'll need to select the three dot menu at the top right corner of the screen and select Edit Property.

  4. Additional property information will appear. Select the drop down menu under the Tax Jurisdiction field.

  5. Select the appropriate Tax Jurisdiction that was setup in Administration.

  6. Click Save in the upper right.

Adding a Tax Jurisdiction to Multiple Properties in Bulk

  1. From the home screen, click the Properties module from the blue side panel.

  2. If your property addresses are correct, you can filter your properties to specific information (such as city name or zip code) that a single Tax Jurisdiction would be applied to.

  3. Check the boxes next to each of the properties that need to be updated. If the list is filtered by a specific factor, you can check the checkbox in the header row.

  4. Select Bulk Actions and a drop down menu will appear. Select Change Tax Jurisdiction.

  5. Select the needed Tax Jurisdiction for the selected properties and click Apply.

⚠️ Bulk Action changes can not be reverted back, so make sure you want to use this method! Otherwise, another Bulk Action will have to be used to overwrite the properties that were changed.

Finding Remaining Properties with No Tax Jurisdiction

To make sure that all of your properties have a tax jurisdiction listed on the property, you create a list of properties that currently do not have a tax jurisdiction to further review.

  1. To do this, go to the Properties module in the blue side menu.

  2. We'll be using the Default search list of Properties. Click the Display function.

  3. The Display window will appear. Enter Tax Jurisdiction Name or select it from the drop down.

  4. Then, click Apply. The list will now display Tax Jurisdiction Name as a column. If the value is blank, this means that no Tax Jurisdiction has been added to the property.

  5. To filter the list to only empty values, select the Filter icon.

  6. The Filter window will appear. Enter Tax Jurisdiction Name or select it from the drop down.

    1. For Filter Type, select Not In

    2. For Value, select all values using the checkbox at the top.

    3. Then, click Apply.

  7. You will now see all properties that do not have a Tax Jurisdiction applied to them for you to review and bulk assign!

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