Tax Configuration
Tax calculation in DiverDash automatically handles complex tax scenarios for your dive center's sales and services. Understanding how to configure tax settings correctly ensures accurate invoicing, proper accounting records, and compliance with local tax requirements.
What You'll Learn
How DiverDash calculates tax on invoices and line items
How to configure tax settings for tax-inclusive vs tax-exclusive pricing
How to set up default tax rates for different types of services
How tax calculations affect your accounting and customer invoicing
Best practices for managing tax configuration in your dive center
Before You Start
Make sure you have:
Administrator permissions to access tax settings
Understanding of your local tax requirements (sales tax, VAT, GST, etc.)
Chart of Accounts set up with appropriate tax liability accounts
Tax rates created in the Tax Rates section
Knowledge of whether your prices include or exclude tax
Understanding Tax Calculation Methods
Tax-Inclusive vs Tax-Exclusive Pricing
DiverDash supports two fundamental approaches to tax calculation:
Tax-Inclusive Pricing ("Prices Include Tax")
The price you enter already includes tax
System calculates the base price by removing tax
Customer sees the exact price you entered
Common in many countries with VAT/GST systems
Tax-Exclusive Pricing ("Prices Exclude Tax")
The price you enter is the base price before tax
System adds tax on top of the entered price
Customer pays more than the entered price
Common in US sales tax systems
How Tax Calculation Works
When Prices Include Tax (Tax-Inclusive)
Example: $100.00 item with 10% tax rate
Entered Price: $100.00 (what customer pays)
System Calculation:
Base Price = $100.00 ÷ 1.10 = $90.91
Tax Amount = $100.00 - $90.91 = $9.09
Total Price = $100.00 (same as entered)
What appears on invoice:
Line Item: Widget - $90.91
Tax (10%): $9.09
Total: $100.00
When Prices Exclude Tax (Tax-Exclusive)
Example: $100.00 item with 10% tax rate
Entered Price: $100.00 (base price)
System Calculation:
Base Price = $100.00 (same as entered)
Tax Amount = $100.00 × 0.10 = $10.00
Total Price = $100.00 + $10.00 = $110.00
What appears on invoice:
Line Item: Widget - $100.00
Tax (10%): $10.00
Total: $110.00
Configuring Tax Settings
Step 1: Access Tax Configuration
Navigate to Settings in the main menu
Click Company
Select the Tax tab
The tax settings interface will open
Step 2: Configure Tax Calculation Method
Setting: "Prices Include Tax"
To enable tax-inclusive pricing:
Toggle "Prices Include Tax" to ON
The toggle will turn green and show enabled
Description will read: "Prices entered in the system already include tax. Tax will be calculated backwards from the total."
To enable tax-exclusive pricing:
Toggle "Prices Include Tax" to OFF
The toggle will be gray and show disabled
Description will read: "Prices entered in the system are tax-exclusive. Tax will be added on top of the entered price."
Step 3: Set Up Tax Liability Account
Purpose: This account tracks tax collected from customers that you owe to tax authorities.
In the "Tax Liability Account" section
Click the "Default Tax Liability Account" dropdown
Select an appropriate liability account (e.g., "Sales Tax Payable", "VAT Liability")
If no suitable account exists, you'll need to create one in Chart of Accounts first
Important: Tax collected from sales will be credited to this liability account automatically.
Step 4: Configure Default Tax Rates
Default Sales Tax Rate (Goods)
Click the "Default Sales Tax Rate (Goods)" dropdown
Select the tax rate for retail products and physical goods
Choose "No default tax rate" if you prefer to set tax rates per item
This rate applies to retail products by default
Default Services Tax Rate (Courses)
Click the "Default Services Tax Rate (Courses)" dropdown
Select the tax rate for services, courses, and training
This rate applies to dive courses and services by default
Default Expense Tax Rate
Click the "Default Expense Tax Rate" dropdown
Select the tax rate for business purchases and expenses
Used when recording business expenses that include recoverable tax
Step 5: Save Your Configuration
Review all settings for accuracy
Click "Save Tax Settings" button
Settings will apply to new transactions going forward
Existing invoices maintain their original tax calculations
Understanding Tax Impact on Invoicing
How Tax Settings Affect Customer Invoices
With Tax-Inclusive Pricing:
Customers see predictable, round numbers ($50, $100, $150)
Invoice shows breakdown of base price and tax amount
Total matches the price you advertised to customers
Professional appearance for consumer-facing businesses
With Tax-Exclusive Pricing:
Prices appear lower in marketing materials
Tax is clearly shown as additional charge
Total is higher than advertised base price
Common in B2B environments
Tax on Different Service Types
Course Fees: Use Services Tax Rate (Courses)
Open Water Diver course: $350 + tax
Advanced Open Water: $400 + tax
Specialty courses: Various prices + tax
Equipment Rentals: Use Sales Tax Rate (Goods)
Daily gear rental: $45 + tax
Week-long rental package: $200 + tax
Retail Sales: Use Sales Tax Rate (Goods)
Dive computer: $500 + tax
Wetsuit: $200 + tax
Accessories: Various prices + tax
Trip Services: May use Services Tax Rate
Day trip: $150 + tax
Multi-day liveaboard: $1,200 + tax
Tax Calculation in Practice
Creating Invoices with Tax
When you add items to an invoice:
Enter Item Details:
Product/Service name
Quantity
Unit price (according to your tax setting)
System Automatically Calculates:
Base amount (if tax-inclusive pricing)
Tax amount based on applicable rate
Line total for the item
Invoice Totals Show:
Subtotal (sum of all base amounts)
Total Discount (if any discounts applied)
Total Tax Amount (sum of all tax)
Grand Total (what customer pays)
Overriding Default Tax Rates
You can override default tax rates on individual items:
When adding items to an invoice
Select different tax rate from dropdown for specific items
Useful for:
Tax-exempt items
Items with special tax rates
International customers
Wholesale vs retail pricing
Best Practices for Tax Configuration
Choosing Tax-Inclusive vs Tax-Exclusive
Use Tax-Inclusive When:
You operate in VAT/GST countries
Your customers are primarily consumers
You want predictable, round pricing
Local regulations require tax-inclusive advertising
Use Tax-Exclusive When:
You operate in sales tax jurisdictions (like most US states)
Your customers are primarily businesses
You want to show tax as separate line item
Industry standard is tax-exclusive pricing
Setting Up Multiple Tax Rates
Create different rates for:
Different types of goods and services
Different jurisdictions (if you operate in multiple areas)
Different customer types (domestic vs international)
Varying tax rates over time
Regular Review and Updates
Review tax settings:
When tax rates change in your jurisdiction
When expanding to new locations
When adding new types of services
At least annually to ensure compliance
Troubleshooting Common Tax Issues
Tax Amounts Seem Wrong
Check these settings:
Verify the "Prices Include Tax" toggle is set correctly
Confirm the correct tax rate is selected for the item type
Ensure tax rates are entered as percentages (7.5% not 0.075)
Verify the customer isn't tax-exempt
Tax Not Calculating
Possible causes:
No default tax rate set for the item type
Item is marked as non-taxable
Customer has tax exemption on file
Tax rate is inactive or expired
Invoice Totals Don't Match Expectations
Verify:
Tax-inclusive vs tax-exclusive setting matches your intent
Discounts are applied before tax calculation
All line items have correct tax rates applied
Rounding settings are appropriate for your currency
Next Steps
Set up Tax Rates: If you haven't already, create your Tax Rates
Configure Chart of Accounts: Ensure proper Chart of Accounts setup for tax liability tracking
Test Invoicing: Create test invoices to verify tax calculations work as expected
Train Staff: Ensure staff understand how tax settings affect customer pricing
Related Topics
Tax Management - Complete tax management including rates and jurisdictions
Client Billing - Creating and managing customer invoices
Chart of Accounts - Setting up accounts for tax tracking
Financial Setup - Initial configuration of financial settings
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