Overview

Some vendors charge tax on the materials you buy from them. Vendor tax applies that rate to material line items on your estimates. Office employees then see a rolled up vendor tax total alongside material cost.

This gives you a truer cost basis before you sell the Estimate, so your margin reflects what you actually pay your vendor.

Things to know

• Vendor tax is charged by your supplier on materials you purchase. It is not the sales tax you charge your customer.

• Vendor tax applies to material line items only. Equipment line items are never taxed, even when the vendor has a tax rate set.

• Vendor tax applies only to materials linked to a vendor that has a tax rate set on its vendor record.

• Vendor tax appears as a rolled up total. It is not shown on individual line items.

• A Business Unit specific tax rate overrides the vendor's default tax rate.

• Vendor tax is a cost value. It affects your estimate cost and margin, not the price your customer sees.

• Your estimate recalculates vendor tax when you change quantity, add or remove an eligible material, change the vendor, or change the business unit.

Best practices

• Confirm your vendor tax rates are current before you build estimates, since the rate is captured when you add the material.

• Set business unit tax rates when you operate across areas with different tax obligations.

• Review the vendor tax total in the Cost section before you sell, so your margin reflects your true material cost.

• Check the vendor tax total again if you edit an estimate after a long gap, because rates might have changed.

Use cases

• A roofing company buys shingles from a supplier that charges tax. The estimate now reflects the taxed material cost, so the crew does not underprice the Job.

• An HVAC company sources equipment parts through two business units in different tax areas. Each estimate applies the rate for its own business unit.

• A plumbing company reviews estimate margin before selling. The Cost section shows material cost and vendor tax separately, so the office can see what drives the total.

Set vendor tax rates

Vendor tax rates live on the vendor record. Set a default rate for the vendor, then add business unit rates if a unit has different tax obligations.

1. Go to the top toolbar and click Settings .

2. From the side menu, select Purchasing or Inventory > Vendors.
   

3. On the Vendors screen that opens, select the vendor you want to edit.

4. On the vendor profile screen that opens, click Edit.

5. In the Purchase Order Details section, enter a rate in the Default Tax Rate field. This rate applies to all business units unless you override it.
   

6. To set a rate for a specific business unit, click Add Tax Rate, then:

   1. In the Tax Rate field, enter the rate for the business unit.

   2. From the Business Unit dropdown, select the business unit you want to apply the rate to.
      

      Tip: Click Add Tax Rate to add more rates. Click Delete to remove a rate.

7. When finished, click Save.

Note: For full vendor setup steps, see Set up vendors.

Review vendor tax on an estimate

1. Open the estimate you want to review.

2. Add a material supplied by a vendor that has a tax rate set.

3. Go to the Material section of the estimate. The Total Vendor Tax subtotal shows the vendor tax for the materials on the estimate.
   

4. Go to the Cost section of the estimate. The Material Vendor Tax row shows the same rolled up total. The estimate's total cost includes this value.
   

Note: Change a quantity or swap a vendor and these totals update automatically.

Want to learn more?

• See Set up vendors

• See Set up vendor list and primary vendor for pricebook items