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Add VAT to invoices: rates, FF&E fees and currency

Set the VAT rate an invoice uses, and see where its FF&E fee and currency come from and how the totals are worked out.

Who can do this: adminsUpdated

An invoice takes its VAT rate, FF&E rate and "prices include VAT" setting from its project at the moment it is created. After that, they belong to the invoice.

Where the rates come from

  1. Settings > Finance > Defaults holds your studio's Default tax rate (%), Default FF&E (%) and the Product prices include VAT switch. See Set your finance defaults.
  2. New projects copy those defaults. Each project can then have its own rates.
  3. A new invoice copies its project's rates.

Changing a default later changes neither existing projects nor existing invoices.

How the totals are worked out

  1. Goods: each line's quantity times its unit price, added up.
  2. If prices include VAT, the VAT is taken out of the goods to find the net amount. Otherwise the goods are already net.
  3. FF&E: the net goods times the project's FF&E rate, if it has one.
  4. Total VAT: the net goods plus the FF&E fee, times the VAT rate.
  5. Subtotal: net goods plus FF&E plus delivery.
  6. Total: subtotal plus VAT.

Currency

  • Invoices made on Create invoice are in your studio's Default studio currency.
  • Invoices made from purchase orders are in the project's currency. Supplier prices in other currencies are converted, and the exchange rates are fixed on the invoice so the figures never move.
  • The cards on Finance and your reports convert everything into the studio's default currency, using exchange rates refreshed through the day.

Good to know

  • If the VAT rate is blank, the invoice has no VAT line at all. That is different from 0%.
  • Techstyles doesn't add VAT to the delivery charge. If delivery should carry VAT for your business, add it as a line item instead, so VAT is charged on it.
  • In Xero, the VAT rate is matched to one of your Xero tax rates by percentage. If Xero has no rate at that percentage, Techstyles creates one.
  • Before connecting Xero, make sure every currency you invoice in is enabled in your Xero organisation. If it isn't, the sync fails with a message telling you which currency to add.
  • A credit note or top-up uses the same rates and currency as its original invoice.