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Tax Settings

Tax settings control how sales tax and use tax are calculated across your quotes, invoices, and work orders. Configuring these correctly is important for accurate reporting and compliance.

Where to find it: Settings → System Settings → Tax Defaults

 

Auto Tax Calculation

When enabled, Floorzap automatically looks up the tax rate for a given zip code or city every time a quote or invoice is created. This means if tax rates change at the state, county, or city level, the system picks up the updated rate automatically — you don't need to manually update it in your location settings.

 

Why it matters: Without auto tax, if a local tax rate changes and you forget to update it manually, your invoices will be calculated using the wrong rate. Auto tax also unlocks the ability to see county and city tax breakdowns in your Sales Tax Report.

Recommendation: This setting should be enabled for all accounts. There is no meaningful reason to leave it off.

Profit Margin Before Sales Tax

When enabled, profit margin is calculated on the product cost before sales tax is applied.

 

For example, a product costs $1.00, you apply a 50% markup to get $1.50, and then sales tax is applied to $1.50.

 

If this is disabled, the system would calculate the profit margin after tax — which inflates your apparent margin and leads to inaccurate profit reporting.

 

Recommendation: This should be enabled for all accounts. Calculating profit after tax is incorrect and may cause IRS-reporting issues.

Tax Calculation After Applying Discount

When enabled, discounts are applied to the invoice first, and then sales tax is calculated on the discounted total.
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If disabled, tax is calculated on the pre-discount amount, resulting in the customer being overtaxed.

Recommendation: This should be enabled for all accounts.

Default Sales Tax Label

Controls the text label shown next to the tax line in the invoice summary. The default is "Sales Tax," but you can change it to anything (e.g., "Tax," "City Tax"). This is a display-only change and does not affect calculations.

GST Number

A static field where customers can enter their GST (Goods and Services Tax) registration number.

 

When filled in, the number appears on invoices. This is primarily used by a small number of customers who are required to display it. It has no impact on tax calculations.

Use Tax Settings

Use tax applies to materials purchased from out-of-state vendors and is required in approximately 13 U.S. states. It is separate from — and sometimes in addition to — sales tax. Use tax in the U.S. applies to materials only, not labor.

 

Apply Use Tax — The master switch. When enabled, use tax will be calculated on applicable line items. When disabled, only standard sales tax applies.

Calculate Use Tax by Customer Location — When enabled, use tax is calculated based on the customer's address. When disabled, it defaults to the store location's tax rate.

 

Calculate Sales Tax with Use Tax — Allows both sales tax and use tax to be applied simultaneously. This is an edge case needed in some states where a rate differential exists between the originating and destination state. Most customers will not need this.

 

Use Tax Scope Options:

  • Material Only Jobs — Applies use tax only to invoices that contain material (e.g., cash-and-carry sales). Correct for most U.S. use cases.

  • Material and Labor Jobs — Applies use tax to invoices that include both material and labor. The use tax itself still only applies to the material line items, but this option determines which invoice types are in scope.

When selecting services for use tax, you can also specify which service types are eligible using the "Enable Sales Tax for Selected Services" sub-option.

Note: The labels for these scope options are known to be confusing. A future update should clarify the wording.

Vendor Tax Options

These settings control how material tax (the tax a store pays to their vendor on purchased goods) is handled in work orders and job costing.

  • Taxable — Tax is calculated and shown as a cost on the work order. This is the standard setting.

  • Tax Exempt — The customer is exempt from paying vendor material tax. The system automatically sets vendor tax to zero.

  • Tax Deferred — Tax is calculated by Floorzap but not shown on vendor payment invoices. It is tracked and summarized in the Material Sold report so the customer can pay the full amount at year-end.

Include Material Tax in Job Costing — When enabled, material tax is included in the job's total cost, which reduces the calculated profit margin. This in turn affects commission calculations. Enable this if you want material tax to count against commissions.

 

Check Labor Tax by Default — When enabled, the tax checkbox on labor line items is automatically checked when a labor item is added. This is primarily for Canadian customers, where labor is taxable. In the U.S., labor is generally not subject to tax.