Throw out your calculator - smarter online invoicing
Another great reason to use Invoiceplace –you can now enter unit prices that include tax, and the tax exclusive price will be automatically calculated. A similar update has been made so you can enter tax inclusive postage prices.
An example is when you have a postage price of $15.00, and this includes 10% tax. Previously you would have to enter the tax exclusive postage price of $13.64. (How to work out the tax exclusive price is explained in the paragraph titled ‘How to calculate a tax exclusive price’ below).
Who benefits from being able to enter tax inclusive unit prices?
This is particularly useful if you are selling goods for which you only know the tax inclusive price. Previously you could only enter the tax exclusive (pre-tax) unit price, so previously you would have to manually calculate what the pre-tax price is.
How have the quotes and invoices changed?
• There is a new check box next to the postage price field titled ‘Includes Tax’. If this is checked it indicates that the postage price includes tax (being GST, VAT, IVA – depending on your country tax code).
• A new check box has been added to the invoice or quote items titled ‘Price per Unit inc. Tax’. If this is ticked it indicates that the unit price entered includes tax.
What hasn’t changed?
The tax exclusive price is still the unit price that is recorded for quotes and invoices. There are no changes to the way the unit prices are stored for your existing invoices and quotes.
This change does not affect receipts.
How to calculate a tax exclusive price
The following is a formula used to calculate the pre-tax or tax exclusive price.
Pre-tax price = Tax inclusive price / 1 + Tax percentage as a decimal number
The tax percentage as a decimal number is a value between 0 and 1 (where 0 = 0% and 1
= 100%).
Pre tax price = $15 / 1 + 0.1 = 13.636363636363636363636363636364 (rounded up to $13.64).
Amount of tax paid equals = Tax inclusive price – Tax exclusive price
Amount of tax paid = $15.00-$13.64 = $1.36
Example – tax inclusive invoice items
An invoice is created for one dozen red roses. The unit price is $40, and this is the price that includes tax. The tax rate is 8%. The check box titled ‘Price per Unit inc. Tax’ is ticked.
When reviewing the invoice the unit price has been updated to be the pre-tax (tax exclusive) unit price of $37.04. Note that the gross price is still $40.
When you open the invoice again the ‘Price per Unit inc. Tax’ check box is not ticked. This is because this price is not the pre-tax unit price anymore. You do not need to tick the check box after the pre-tax price has been calculated for you. The check box only indicates that Invoiceplace should calculate the tax exclusive unit price for you.
Example – tax inclusive postage and handling charge
A postage and handling charge of $15 is applied to an invoice, and this charge includes an amount of tax calculated at 10%. The check box ‘Includes Tax’ is ticked.
After saving your changes the postage and handling price has been updated to the pre-tax price of $13.64. Also the ‘Includes Tax’ check box is no longer ticked – similar to the invoice items you do not need to tick this again.
