Tax Rates
Tax rates define the taxes applied to products at the point of sale. The POS system uses basis points for precision and supports both simple and compound tax configurations.
Creating a Tax Rate
Navigate to HQ Manager > Tax Rates and click "Add Tax Rate". Provide a name (e.g., "Standard Sales Tax"), a code (e.g., STD), and the rate in basis points. One basis point equals 0.01%, so common rates translate as follows:
| Percentage | Basis Points |
|---|---|
| 5.00% | 500 |
| 7.50% | 750 |
| 8.25% | 825 |
| 10.00% | 1000 |
| 21.00% | 2100 |
Using basis points instead of percentages eliminates floating-point rounding errors in financial calculations. The system stores all monetary amounts as integers (cents) and tax rates as basis points, ensuring exact arithmetic throughout the pipeline from sale to report.
Why Basis Points?
Consider a product priced at $9.99 with an 8.25% tax rate. Using floating-point math, the tax would be $0.824175, which must be rounded. With basis points and integer math, the calculation is: 999 * 825 / 10000 = 82 cents (using integer division with banker's rounding). This deterministic approach ensures the same result on every platform and avoids the penny discrepancies common in floating-point-based POS systems.
Compound Taxes
Some jurisdictions require compound taxes, where one tax is calculated on the subtotal and another is calculated on the subtotal plus the first tax. To configure compound taxes, create multiple tax rate entries and mark the compound tax with the "Compound" flag, specifying which base tax it compounds on.
For example, in a jurisdiction with a 5% federal tax and a 9.975% provincial tax that compounds on the federal tax, you would create two rates: "Federal" at 500 basis points (non-compound) and "Provincial" at 998 basis points (compound on "Federal"). The system applies the federal tax first, then calculates the provincial tax on the subtotal plus the federal tax amount.
Assigning Tax Rates to Products
Each product has exactly one tax rate assignment. When creating or editing a product in the Products section, select the appropriate tax rate from the dropdown. For tax-exempt products, create a tax rate with 0 basis points and name it "Exempt" or "No Tax".
Tax rate changes sync to all stores. If you change a rate (for example, due to a legislative change), the new rate takes effect at each store after the next sync cycle. Historical transactions retain the tax rate that was in effect at the time of sale.
Tax Reports
The Z, ZZ, and HQ-level reports break down collected tax by rate. Each report line shows the tax rate name, the taxable amount, and the tax collected. This makes it straightforward to file tax returns with your jurisdiction.