Understanding Sales Tax, Use Tax, and Material Tax

Floorzap supports three different tax types: Sales Tax, Use Tax, and Material Tax. Each serves a different purpose.

This article explains how they work and when each applies.

Sales Tax

Sales tax is collected from your customer.

• It appears on the invoice.

• You collect it at the time of sale.

• You remit it to your state or local tax authority.

• The rate is calculated automatically based on the job address.

In Floorzap, sales tax applies only to the service types you configure in your settings (for example, Cash & Carry).

Use Tax

Use tax is paid by your store — not your customer.

• It does not appear as a charge to your customer.

• It is treated as a job cost.

• Your business reports and remits it to the government.

Use tax is typically used when you install materials and do not collect sales tax from the customer.

Floorzap allows use tax to be calculated either:

• From your store’s Location Settings (static rate), or

• Dynamically based on the customer’s job address (if enabled)

Material Tax

Material tax is paid by your store to the vendor.

• It appears on the Purchase Order.

• The vendor collects and remits the tax.

• It does not appear as sales tax on the customer invoice.

Material tax is configured at the vendor level.

Important Rule: Sales Tax and Use Tax Are Mutually Exclusive

For any given service type:

• You either collect sales tax from the customer

• Or your store pays use tax internally

You do not apply both to the same service.

What Happens If a Customer Is Tax Exempt?

If a customer is marked Tax Exempt:

• Sales tax on their invoice will be $0.

• Use tax may still apply as a store cost, depending on your configuration.

Tax exemption only affects what the customer is charged — not your internal job costs.