Default tax codes

IpreDictDeatH

Ive got the sage instant package and im just setting it all up now. Im starting to get the hang of basic accountancy lingo and im sure i will be fine. But maybe somebody could explain in plain english something to me i just cant grasp.

I am being asked to put a VAt code as a default on a cash reg account, or on a supplier account. What if you deal with more than one VAT rate with that customer, or obviously, on the till? I take it sage doesnt just lump everything in under the default vat code i have set for these specific accounts?

Whats the purpose of default tax codes?

HcksawJimDuggan

The default VAT code is just the VAT code that is automatically selected when you prepare to post an invoice for that supplier in Sage. It can be changed to a different VAT code if needs be when posting.

Similarly, a default nominal code can be selected when setting up a supplier (e.g.) for ESB you would select light & heat. These are basically shortcuts for when you are preparing to post invoices as most invoices from the same supplier will be at the same VAT rate and to the same nominal code.

IpreDictDeatH

Ok cool i can understand that, but what about the default tax code i have to enter for the cash register 'bank account' on my accounting software? The till deals with many VAT rates. Do i enter the different product categories with there respective vat rates seperately when recording cash reg totals at end of day/week?

Thanks for your help by the way.

HcksawJimDuggan

Yes you will need to record the different product categories seperately as they will have different VAT rates. In that case you may be better off leaving the default tax code blank as if it is prepopulated you may occasionally enter the product sales under the incorrect VAT code.

It also may be useful to set up a different Sales nominal code for the various product categories.