1. Topic: Sales Tax and 1099 Reporting
E-learning curriculum
SAP Business One
Welcome to the SAP Business One eLearning curriculum.
This topic describes Sales Tax and 1099 Reporting in SAP Business One.
Throughout the topic you will be presented with slides and product demonstrations as well as being asked a few short test questions. The topic is approximately 20 minutes long.
To move from slide to slide simply click next. To skip back or forward within a slide, click on the timeline at the bottom of the screen. To jump to a new section use the navigation bar on the lefthand side of the screen.
We hope you enjoy the topic.

2. 2007 - Sales Tax and 1099 Reporting
Please review the following terminology and menu changes that apply in SAP Business One 2007:
As shown in demo:
2007
Jurisdictions, Values and Codes
Previous menu path:
Administration  Definitions  Financials  Tax  Define Sales Tax Jurisdiction Types
New menu path:
Administration  Setup  Financials  Tax  Sales Tax Jurisdiction Types
Previous form name:
Define Sales Tax Codes
Previous checkbox name:
Expenses
New form name:
Sales Tax Codes – Setup
New checkbox name:
Freight
1099 Reporting
Reports  Financials  Accounting  1099 Report
Reports  Financials  Accounting  1099 / 1096 Report
In SAP Business One 2007, some terminology and menu paths have changed from those shown in the demonstrations.

3. Topic Objectives At the conclusion of this topic, you will be able to:
Create multiple levels of Tax Jurisdictions from ‘City’ to ‘Federal’
Set default values for Business Partners and Items
Create Sales Tax Reports
Setup 1099 Definitions
Create 1099 Reports and submit them
By the end of this topic you will be able to:
Create multiple levels of tax jurisdictions from ‘City’ to ‘Federal’.
Set default values for Business Partners and Items.
Create Sales Tax Reports.
Set up 1099 Definitions.
Create 1099 Reports and submit them.

4. Tax Jurisdictions, Values and Codes
Step 1 - Define Sales Tax Jurisdiction Type:
Administration > Definitions > Financials > Tax
Step 2 - Define Sales Tax Jurisdiction Values:
Administration > Definitions > Financials > Tax
Step 3 - Define Tax Codes:
Administration > Definitions > Financials > Tax
The first step is to define the Jurisdiction types relevant to your company. For example, Federal, Province or City. You can create as many types as required. This can be found by using the following path: Administration > Definitions > Financials > Tax > Define Sales Tax Jurisdiction Type.
The next step is to define each specific Sales Tax Jurisdiction. We also need to set the tax rates and G/L posting accounts. This can be found by using the following path: Administration > Definitions > Financials > Tax > Define Sales Tax Jurisdictions.
The final step is to to setup the tax codes that combine the appropriate Tax Jurisdictions. This can be found by using the following path: Administration > Definitions > Financials > Tax > Define Sales Tax Codes. Here, we can build a tax schedule using the predefined Jurisdictions. The overall tax rate will be calculated automatically.
In the next demonstration, we will see how to define a Sales Tax Definition.

5. Default Codes: Customers, Items and Services
A/R, Customer Record:
Tax codes are associated with customer locations. By default, tax codes are based on the ‘Ship-to Address’ of a customer in the Business Partner Master Record.
A/P, Items:
For Item Invoices, the default tax code is based on the default tax code for the Warehouse receiving the goods. This can be found using the following path: Administration > Definitions > Inventory > Define Warehouses
A/P, Services:
For Service Invoices, it is based on the default tax code of the company which is under Administration > System Initialisation > Company Details > ‘Accounting’ tab
Default Tax Codes can be set for Customers, Items and Services.
For Customers, the default tax code in the customer master record will be based on the ‘Ship-to Address’ of the customer.
For Item invoices the tax code will be based on the tax code of the warehouse receiving the goods. This can be found under: Administrations > Definitions > Inventory > Define Warehouses.
For Service invoices the tax code will be based on the tax code of the company. This can be found under: Administration > System Initialisation > Company Details > ‘Accounting’ tab.

6. Setting up default behaviour for Inventory Items
For each item your business buys or sells, you can decide if the item is taxable and also by default, whether tax is calculated ‘normally’ or on a ‘Use Tax’ basis.
For each item your business buys or sells, you can decide if the item is taxable and also by default, whether tax is calculated ‘normally’ or on a ‘Use Tax’ basis. The ‘Use Tax’ option will be explained on the next slide.

7. ‘Use Tax’ Option Normal Tax No Tax Use Tax
These options can be sent by clicking on the Purchasing Data tab on the Item Master record, and changing the ‘Tax Type’ field.
The warehouse used in the A/P document must be defined as ‘Allow Use Tax’. Otherwise, the journal entry for the ‘Use Tax’ item will behave as a ‘No Tax’ Item.
Once the item is defined as ‘Tax Liable’, there are three options for calculating the tax in the journal entry of an A/P invoice:
Normal Tax: The journal entry will contain the A/P Tax Account on the debit side.
No Tax: Tax will be calculated but no journal entries will be made in the tax accounts.
Use tax: The journal entry will contain the Use Tax Account on the credit side.
These options can be sent by clicking on the Purchasing Data tab on the Item Master record, and changing the ‘Tax Type’ field.
It is important to note here that the warehouse used in the A/P document must be defined as ‘Allow Use Tax’, otherwise the journal entry for the Use Tax item, will behave as a No Tax Item.

8. How Tax is calculated in an Invoice
Depending on the Goods or Services supplied, default tax codes are generated appropriately.
Customers/Sales Invoices:
For Items and Services it is based on the ‘Ship-to’ location of the Goods
Vendors/Purchase Invoices:
For Items, it is based on the warehouse where the Goods are shipped to
For Services, it is based on the company’s default tax code
Overriding Defaults:
Can be done for tax on any line item
Depending on the Goods or Services supplied, default tax codes are generated appropriately.
For Customer/Sales Invoices:
For Items and Services it is based on the ‘Ship-to’ location of the goods.
For Vendors/Purchase Invoices:
For Items, it is based on the warehouse where the Goods are shipped to.
For Services, it is based on the company’s default tax code.
Overriding Defaults:
Can be done for tax on any line item. In the next demonstration, we will see how to enter an A/R and an A/P Invoice, and how the tax is calculated.

9. Sales Tax Reporting
You can choose to run tax reports either by one or more Tax Jurisdictions or Codes.
The Tax report can be found under the following path: Reports > Financials > Accounting > Tax > Tax Report
You can choose to run tax reports either by one or more Tax Jurisdictions or Codes. The tax report can be found under the following path: Reports > Financials > Accounting > Tax > Tax Report. You can also choose ranges of dates, source of tax documents and printing options.
You can also choose ranges of dates, source of tax documents, and printing options.

10. 1099 Reporting Features Unlimited 1099 Form and Box combinations
Primary 1099 Form and Box values supplied
Ability to specify default 1099 types for vendors
Opening balances feature
Edit 1099 Form/Box/Amount functionality
Minimum 1099 reporting definition
Submit at year end
Appropriate 1099 Reports
We are now going to look at the ‘1099 Reporting’ features in SAP Business One. Some of the key features are:
You can create unlimited 1099 ‘Form and Box’ combinations.
You can specify default 1099 types for vendors.
You can import opening balances into SAP Business One.
There is a feature that allows you to edit 1099 Form/Boxes and Amounts.
At year end, you can submit your 1099 Reports.

11. Setting up 1099 Forms, Boxes and Values
Step 1 - Define 1099 Table:
Administration > Definitions > Financials > Define 1099 Tables
Comes with main form types, others can be added
Step 2 - Setup 1099 Boxes:
Click on ‘1099 Boxes’
Step 3 – Specify 1099 Minimum Values
Fill in the ‘Minimum 1099 Amount’ field then click on OK. This can be done for each form/box combination for every vendor prior to running any reports
Optional: You can specify Additional Expenses for which you want to include in your 1099 calculation. These can be set using the following path:
Administration > System Initialisation > Document Settings > General Tab > Tick ‘Manage Expenses in Documents’ > Click on ‘Define Expenses’
There are a few steps required in SAP Business One in order to setup the structure for 1099 Reporting.
The first step is to define the ‘1099 Table’. There are several default main form types, however others can be added.
The second step to setup the values for the 1099 Boxes.
Thirdly, minimum values can be specified if required. This can be done for each form/box combination for every vendor, prior to running any reports.
Optionally, you can specify additional expenses that you want to include in your 1099 calculations.

12. Setting up default codes for A/P - Vendor Record
You can specify if a vendor is subject to 1099 processing and the default form and box values to use in invoices. As 1099 information is recorded at the document level, the user can override the default value invoice entry, or edit them later.
You can specify if a vendor is subject to 1099 processing and the default form and box values to use in invoices. As 1099 information is recorded at the document level, the user can override the default value invoice entry, or edit them later.

13. 1099 Opening Balances
You can manually enter 1099 Opening Balances that represent the total amount already processed in your old system. This can be done for each unique vendor/form/box combination. This can be found under the following path:
Administration > System Initialisation > Opening Balances > 1099 Opening Balance
This process will not create a journal entry
You can manually enter 1099 opening balances that represent the total amount already processed in your old system. This can be done for each unique Vendor/Form/Box combination. This can be found under the following path: Administration > System Initialisation > Opening Balances > 1099 Opening Balance.
Note however, that this will NOT create a journal entry.

14. How 1099 is calculated
1099 becomes due on amounts paid not on amounts billed.
Invoicing Stage:
1099 Form and Box types are specified at the invoice entry stage
1099 type may be edited later
Payment Stage:
After payment, 1099 appears in default reports
Opening Balance Transfer:
Items entered into the ‘Define 1099 Opening Balances’ window will be included in the 1099 calculation amount
1099 becomes due on amounts paid, not on amounts billed.
At the Invoicing Stage, 1099 Form and Box types are specified type may be edited later.
After payment, the 1099 amount will appear in default reports.
Items entered into the ‘Define 1099 Opening Balances’ window will be included in the 1099 calculation amount.

15. Editing 1099 information before and after payment
Before Payment
1099 form and box information can be changed
After Payment
1099 form and box information can be changed, as well as amounts
In SAP Business One, it is possible to edit 1099 information both before and after payment.
Before payment, it is possible to change the 1099 Form and Box information associated with a vendor invoice.
After payment, additionally you will be able to change the amount.
In order to make these changes you should use the following path: Financials > 1099 Editing.
Here, you can specify which document types and which vendors you wish to view.

16. 1099 Reporting To access 1099 Reporting, use following path:
Reports > Financials > Accounting > 1099 Report
Double-click on a row in the report to access the vendor detail by transaction
Click on the ‘Print’ icon to submit the 1099 Report
The last area to cover is 1099 Reporting.
In SAP Business One, there is a large amount of control over what information you would like to view using 1099 Reporting.
To access 1099 Reporting, click on Reports > Financials > Accounting > 1099 Report.
By double-clicking on a particular row on the 1099 Report, you can access the vendor detail by transaction.
Click on the print icon on the toolbar to submit the 1099 Report. Once an item has been submitted, it will no longer be possible to edit it.

17. Topic Summary You are now able to:
Create multiple levels of Tax Jurisdictions from ‘City’ to ‘Federal’
Set Default values for Business Partners and Items
Create Sales Tax Reports
Setup 1099 Definitions
Create 1099 Reports and submit them
You are now able to:
Create multiple levels of tax jurisdictions from ‘City’ to ‘Federal’.
Set Default values for Business Partners and Items.
Create Sales Tax Reports.
Setup 1099 Definitions.
Create 1099 reports and submit them.
Thank you for your time.