Texas Sales Tax - Best Practices in Service Titan

[kswaba1]

Here is our dilemma.  In Texas, we are required to charge sales tax on materials in Service Titan for Residential customers and sales tax on total ticket for Commercial customers.  We have a resale certificate with our suppliers.

What is the best way to set this up in ST.  We currently have our taxes setup as follows:  Commercial Labor 8.25%,  Residential Labor 0%, and Residential Material @ 8.25%. 

The following are the problems we are having with this tax setting:

Example: We sell a flat rate task (includes commonly used materials that are taxed) to a residential customer for a water heater installation, we present an estimate, customer approves and we perform the work.  When we invoice the customer and need to add additional non-chargeable materials, additional taxes are added to the invoice even though we did not charge for the material. 

1) How do I capture job costs without causing confusion to our technicians in the field for non-chargeable material?  To prevent additional taxes added after the invoice is approved, we are having to delete the cost of the non-chargeable material so the system doesn't calculate additional taxes. 

2)  The invoice will show a "material tax" even though our materials are not visible on the invoice. In some cases, the material tax is extremely low.  Is there a way to not display the tax on a residential customers invoice and only display taxes on commercial customer invoices?  

Any Texas customers, if you have a solution, we are all ears.  Thank you. 

R

[erinpbradley]

We are located in Texas and it was a struggle to set up our sales tax processes. I don't know if I'll be too much help since we do time + materials billing except for large contract jobs, but this is our process now:

1. We use three tax zones - Residential Sales Tax (taxes materials only), Commercial Sales Tax (taxes labor + materials), No Sales Tax (for tax exempt customers)

2. For flat rate projects, we bill the customer using a placeholder task called CONSTRUCTION with their flat rate price. Then, we add an adjustment invoice with all of the materials we actually used (at our cost, not at regular retail price). We decrease the amount of the CONSTRUCTION tax by the amount of the materials + sales tax owed on them. 

[DianaK]

Good afternoon,

It sounds like you have the setting that allows you to charge tax on non-chargeable materials. There is a config that will ONLY charge tax on chargeable materials. With that on, when you add non-chargeable materials to the invoice, it will not affect the tax charged. Would that solve your problem?

[DianaK]

Please note that if we turn it on the following will apply:

• Service Items marked as taxable will be included
• Chargeable Materials marked as taxable will be included.
• Does not include POs or Returns in the calculation
• Taxable Equipment will NOT be taxed

Right now the following applies to you:

• Service Items flagged as “Labor” and marked as taxable will be included
• Materials are Calculating Material Tax
• Charges tax from the PO on this invoice 
• Note, this will double the tax, it calculates on the PO and the listed material unless the cost on invoice material is $0.01
• Charges tax on non-chargeable materials (unless $0 cost)
• Note, you can’t set a non-chargeable material as non-taxable so they are always taxable regardless if taxable is unchecked on the material in the Pricebook
• Charges tax on chargeable material flagged as taxable
• Will not work with Enhanced Sales Tax exporting to QBO or QBD (since materials are not listed on invoice, QB cannot calculate tax)

[e_dunn]

Hi @kswaba1 - Let's see if we can rally some help for you.

@CHunter or @DillonGoTime - any thoughts?