How to Manage Sales Tax | Lightspeed | Partial Integration

How to Manage Sales Tax | Lightspeed | Partial Integration

How to Manage Sales Tax on a Discounted Sale


Everything that I am about to show you from this point forward has been collected from retailers like yourselves. This is to be taken as a suggestion not a direction. 

Most States have tax laws that require a consumer to pay the full tax that is owed on a free/discount item before the discount is applied. 


If the discount is sponsored by the manufacturer or the distributor and you will be reimbursed by either of these parties for offering the discount, the sales tax base is the full sales price and not the reduced sales price. As noted with manufacturer’s coupons, because the tax base is the amount of receipts you receive for selling the product, the states generally don’t distinguish whether the payment comes from the customer or by some third party. This rule is pretty uniform across the country. - Ned Lenhart, TaxJar

There is some preliminary setup required. 
  1. Create a non-inventory item in your Lightspeed inventory. Make sure that you uncheck the box for Taxable (you don't want to charge tax on tax) and set the MSRP to 0.00. I also added a Note below Custom Fields that says "Our State tax laws require that we still charge the full tax on goods even if they are discounted or comped entirely. Thank you." Then checked the box so it will show up on the receipt so the customer knows what it is. Whether or not you add a note is totally up to you.

Now that you have your non-inventory item for Tax you can use it during a transaction. This method is the simplest if there is only one item on the sale, so we'll start there. 

Start by adding your Tax on Free Good item to the sale along with the item that the customer will be taking home for free. It will not alter the sale yet since it's value is 0.00. Before you apply your discount to the free good make a note of what the tax is at the right. 



Now click on your Tax item and open it and edit it. Change it's 0.00 value so it matches the the tax owed on the item pre-discount.

Now click on the free good and apply your discount (it is best to make these discounts beforehand so you can just select them from the drop-down). 

You can create premade discounts by going to Settings and selecting Discounts which is grouped below Pricing. Lightspeed provides a more in depth explanation on this on their help desk. https://retail-support.lightspeedhq.com/hc/en-us/articles/228840687-Creating-discounts



The total of the sale should now only be the tax owed. 


If you have more items than just the Free Good on a sale it will require some quick math to determine the tax owed. A calculator will come in handy. I use the one built into my computer. First you will need to find out what percent your sales tax is in your state. I'm in NC so I'll use ours which is 4.750%. Now use your calculator and multiply the Price of the Free Good by 4.750%. For instance, in the example above 39.99 x 0.475 = 1.90. 

It is a little more challenging to determine how much tax is owed on an item that is only partially discounted and not comped completely. For instance, if I only discounted the bag in the example above 5% instead of 100% the discount would be 2.00 instead of 39.99. In this instance it is best to make a note of what the total tax is before the 5% discount is applied. In this example that is $1.90. Now we apply our 5% discount. This drops the tax owed to $1.80. The difference between $1.90 and $1.80 is $0.10. So you would change the 0.00 on your Tax on Free Good item to 0.10.