Note: Compounding tax features are not activated by default. To get access to these free features, contact Green Bits support.
Compounding taxes are "taxes on a tax" that are applied in a particular order that you specify on the Taxes page in the Back Office.
In some parts of California, you need to configure two different types of taxes in Green Bits:
- Base Tax is applied to the pre-tax price of the item. It does not include – and is not influenced by – any other taxes. This is the "standard" type of sales tax that most of us are familiar with.
- Compounding Taxes are applied in a particular order. The first compounding tax is calculated based on the pre-tax price of the item. The second compounding tax is calculated based on the sum of the pre-tax price plus the first compounding tax. Base Taxes are not included in these calculations.
Note: California sometimes uses "base tax" to refer to the first tax in a compounding tax structure. In Green Bits, Base Tax refers to a tax that is not compounded.
Check out this example, where compounding taxes are compared to base taxes, so you'll understand the difference.
Configure Base Tax
- On the Taxes page in Back Office, select + Add New Tax Type.
- Name the tax, and specify whether it applies to Marijuana Only.
- Select Base Tax.
- Select the Product Types and Customer Groups that this tax should apply to.
- Enter the tax rate as a percentage.
- Specify whether this tax should be Inclusive or Exclusive.
- If you select Exclusive, select whether you want to apply this tax to the Discounted or Undiscounted price. We strongly recommend selecting Undiscounted.
- If you selected Inclusive, the tax must be applied to the Discounted price.
- For Start Date, select current date if you want this tax to take effect immediately. Otherwise, select the date you want the tax to start.
- For End Date, keep it at Never. If this tax changes in the future, you can edit the existing tax rate to keep your historic tax records.
- Scroll back up to the top and select Save.
Configure Compounding Taxes
To add and configure compounding taxes, repeat the steps to configure a Base Tax, with the following exceptions:
- Indicate Marijuana Only = Yes, unless your compounding taxes also apply to non-marijuana merchandise.
- Indicate that this is a Compounding Tax, not a Base Tax.
- Select No (Exclusive Tax) and Undiscounted.
- Important: Make sure your compounding taxes are listed in the order they should be applied on the Taxes page. To change the order, select and drag the taxes to the correct order.