Setting up your taxes
When you set up your taxes, you have an ability to input all state, local, and cannabis taxes to your IndicaOnline account. This tutorial will show you how to set up your taxes inclusive or exclusive of the price, and how to assign the proper tax tier to different patient types.
There are 3 different patient types that will have a specific tax tier assigned to each one of them. To create a tax tier follow the steps:
- Click on Config and select Tax
- Click Create New Tax Tier from the tax menu
- Set the proper tax percentages.
- Click SAVE
Each Tax Tier will include 3 different tax rates:
- Sales Tax – Sales tax applied to non-cannabis products
- MJ Sales Tax – sales tax applied to products marked as marijuana product
- Local MJ Tax – local city or county cannabis taxes applied to products marked as marijuana product
In certain cases, some types of medical patients will not pay sales tax for cannabis products but will pay sales tax on other items. Here you can set the proper percentages for each type of the customer. Depending on how your business works, any local cannabis taxes and the excise tax (if it is not included in the product price), should be recorded under the Local MJ Tax. If the excise tax is already included in the sale price of the product, you do not need to set it as a separate tax percentage.
You will also have an option to apply Local MJ Tax before the sales taxes, so the sales taxes will be applied on top of the selling price and Local MJ Tax.
Depending on your location and business type you may create several different tax tiers and assign them to each patient type.
You will also have to assign which tax tier will be applied to patients/customers who sign up online. To do so, select the tax tier for Potify.
Applying local taxes before sales tax
In some cases, you would want to apply local cannabis taxes before the sales tax. To do so turn on the setting 'Apply Sales Tax To Local Tax Amount.' Note, this setting can only be turned on when your taxes are not included in the price.
In the example below, the computation of sales tax on a taxable sale includes a cannabis business tax. Sales tax is applied to the total selling price including the cannabis excise tax and business tax. This example assumes an 8.5 percent sales tax rate and a 10 percent business tax, but your actual rates may differ. You must use the rates in effect at the time of sale.
Sales tax calculation:
Including taxes into price
If you want to have your taxes included into the price of the product turn on the setting 'I will enter prices inclusive of tax.' With this setting turned on, the system will not add taxes on top of your selling total (i.e. if you set up a price for 1g of one of the products at $10.00, the total your customers will pay will be $10.00). Then we will deduct taxes from this total for reporting purposes.
This setting is only available for a single tax tier (can't be used with multiple tax tiers) and the setting 'Apply local tax to the business tax amount' must be turned off.
Assigning Patient Type for New Patients/Customers
After you set up the taxes, you will be able to assign a proper patient type for all new patients. Depending on the patient type, the appropriate taxes will be applied to the order.
For any questions concerning the breakdown of your State, County, or City tax rates please contact your local tax experts. For dispensaries located in the State of California, you can also refer to the California Department of Tax and Fee Administration via this link: https://www.cdtfa.ca.gov/
Refer to our article here how to enable your tax settings in IndicaOnline.