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Tax Settings

When a business has a default sales tax rate, DayZero adds that tax to an invoice's taxable lines when the invoice is finalized. The customer is charged the tax, the tax is booked to a liability account instead of revenue, and the invoice shows the subtotal, the tax and the total.

Availability

The Tax Settings page is switched off in DayZero for now:

  • It is not in the Books sidebar, and a link to it opens Books instead.
  • Product variants don't show a tax-code picker.
  • Regent can't list, create or change tax rates or tax codes.
  • A new business starts with no tax rates and no tax codes, so its invoices carry no sales tax.

A business that already has a default rate, for example one imported from QuickBooks or created through the Tax API, is still charged tax as described below.

Which lines are taxed

Tax is worked out once, when you finalize the invoice. A draft shows no tax yet.

Line Taxed?
A Products & Services item Only when the item's Taxable box is ticked (it starts unticked)
An inventory product variant Yes, unless the variant's tax code is marked not taxable (Exempt, Non-Taxable, Resale)
A custom line Yes
A negative custom line, such as a discount or credit Lowers the taxed amount in proportion to how much of the invoice is taxed
A negative item line (a return) Lowers the taxed amount only when the item is taxed

The tax is the taxed amount times the default rate, rounded to the nearest cent. It is saved on the invoice as one tax line, and the invoice total becomes the lines plus the tax. Only the default rate is applied: for a combined state and local rate, the business needs one rate with the combined percentage.

Exempting one invoice

When the business has a default rate, the invoice form shows Don't charge sales tax on this invoice:

  1. On a new invoice in Invoices (not a recurring schedule), tick Don't charge sales tax on this invoice before you create it.
  2. On a draft, open the invoice, click Edit, and tick or untick the same box.

Once an invoice is finalized its tax can't change. An exempt invoice shows Sales tax: Exempt in its totals.

What the invoice shows

A finalized invoice with tax lists Subtotal, one line per tax rate with its percentage, and Total above Total Paid. The invoice PDF lists the same rows.

Invoices sent through Stripe

Before Stripe finalizes the invoice, DayZero adds the sales tax to the Stripe invoice as its own line, so the amount the customer is asked to pay is exactly the amount DayZero books.

  • If the Stripe invoice already uses Stripe's own automatic tax, DayZero adds nothing and books Stripe's figures.
  • If Stripe's final total ever differs from the lines plus DayZero's tax, DayZero books the amount Stripe charged, without a separate tax line, and logs the mismatch as an error for the DayZero team to investigate.
  • Retrying a failed finalize replaces DayZero's tax line on the Stripe draft rather than adding a second one.

Accounting impact

  • Finalizing posts Dr Accounts Receivable for the total, Cr Sales for the lines, and Cr the rate's liability account for the tax (Sales Tax Payable when the rate names none). The liability clears when you remit.
  • Voiding the invoice reverses the tax with the sale.
  • Contract invoices carry no default-rate tax: the contract booking posts their total.
  • Tax already on an invoice is not recalculated when a rate changes later.
  • The Tax Summary report under Tax & Compliance in the Report Library shows tax collected and payable by jurisdiction. Exempt invoices count as non-taxable sales.

Limits

  • Sales tax applies to invoices only. Bills, expenses and bank transactions are not taxed.
  • Exemption is chosen per invoice; there is no exemption setting on a customer.
  • Deactivating the default rate leaves no default, so new invoices are finalized without tax.

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