Introduction to Tax Rates and Tax Classes

Simphony Essentials uses tax rates and tax classes to assign taxes to menu items, discounts, and service charges.

A tax rate is the percentage at which taxes are paid to a government. In some jurisdictions, multiple tax rates apply. Usually these tax rates must be calculated separately for accounting purposes (allowing each jurisdictional government to collect the appropriate tax amount).

A tax class is a collection of tax rates. Tax classes determine the tax rates that apply to menu items and service charges, and which tax rates can be reduced by discounts. Consider the following example: 2% City Tax Rate + 4% State Tax Rate = 6% Sales Tax (tax class which contains two tax rates). In this example, both the city and state tax rates are active for the Sales tax class. The total sales tax is 6%. By grouping multiple tax rates into a single tax class, you can view a record named Sales Tax.

You can associate a tax class with the following types of records:

• Menu Item Class: All menu item definitions in the menu item class are taxed using the tax class.

• Discount: When you assign a tax class to a discount, the taxes linked to the tax class are recalculated when the discount is applied using the reduced taxable sales value.

• Service Charge: Some types of service charges are taxed, such as banquet and room service transactions.

For server convenience, bars often use inclusive taxes.

You can set order types to have the appropriate tax rates in the revenue center. The following table shows an example configuration using Order Types:

Table 8-2 Example of Inclusive Tax with Multiple Revenue Centers

Revenue Center	Order Type Tax Configuration
Bar	Inclusive tax rate enabled Add-on tax rate disabled
Dining Room	Inclusive tax rate disabled Add-on tax rate enabled

• Configure Tax Rates and Tax Classes