NetSuite Tax Management Considerations
Within this article we will discuss a couple NetSuite Tax considerations.
As a company you may find yourself in a position where you need to charge use tax on invoices and/or purchases within NetSuite. Within this article we will discuss a couple considerations when making a business decision on what tax process whether it be NetSuite SuiteApp and/or SuiteTax.
We will also discuss a few alternative options supplied by 3rd party vendors that have seamless integrations and/or plugins to NetSuite.
Breaking Down NetSuite Tax Abilities
Within NetSuite you have a couple of options to how you wish to collect taxes, however before we get into those options as a business you should think through a few things for taxes. Foremost you should have a clear understanding of where you are required to collect taxes, how your business will need to report these taxes, and how and when you will need to pay these taxes. With all of that said you have two options within NetSuite for Collecting Taxes, you can use the SuiteApp and/or you can use NetSuite SuiteTax.
NetSuite Tax – SuiteApp
With the NetSuite Withholding Tax SuiteApp, you can record the effect of withholding tax on both sales and purchases, either at the time of accrual or at the time of payment, depending on the country’s taxation rules. Before you make your decision for the NetSuite SuiteApp version you will also need to have these features enabled in your account.
a. Advanced Taxes
b. Custom Records
c. Server SuiteScript
d. Client SuiteScript
The SuiteApp allows you to define tax types, tax codes, tax groups and setup default tax codes. To track taxes, you must specify tax codes on your transaction records. Tax codes contain information about tax rates and the types of transactions that the tax codes should be applied to. Tax codes must be set up with the right tax control accounts and tax types so that NetSuite can correctly post the taxes to your general ledger.
For accounts with Advanced Taxes enabled, tax schedules must also be set up to determine how NetSuite calculates taxes for items in each nexus. When installing this bundle and/or the international version of this bundle if you are collecting taxes outside of the US, it is worth mentioning that then when you add a new country nexus, the VAT/GST tax codes for that nexus are automatically provisioned.
Changes to the tax rates rarely get announced by the tax authorities, and rules vary largely as well. Within NetSuite it is the responsibility of the System Administrators to update these tax rate changes when they are notified by finance. It is highly recommended that you study the rates and their associated changes carefully prior to making any changes within your NetSuite Account
NetSuite Tax – SuiteTax
NetSuite SuiteTax is designed to help you manage your in-country transactions and any special tax situations/rules. SuiteTax provides a great flexibility to support specific country needs and legislative changes regarding business use tax calculations and/or reporting. Once you enabled SuiteTax within your NetSuite Environment it cannot be disabled the feature.
With the enablement of SuiteTax, the only field that will remain on the item record is the Manufacturer Tax ID. When saving a transaction, the amounts for the tax summary and tax details are calculated by the appropriate tax engine. SuiteTax also provides you with the ability to preview tax calculations prior to saving the transaction.
With the implementation of SuiteTax, the tax engine no longer requires the additional fields. There are also a few other known changes and/or limitations to SuiteTax Bundle:
a. Inter-company Journals are not yet Supported
b. Form customizations of Tax Details are not supported
c. Finance Charge is not supported
d. Tax Liability & Sales Tax Payments are not supported
e. OpenAir Integration is not supported
f. There are also additional limitations for specific SuiteCommerce functionality as well.
SuiteTax API uses internal or external tax engines to calculate taxes for transactions in NetSuite. A tax engine represents an implementation of the SuiteTax plug-in feature.
The plug-in implementation defines the process by which the tax engine calculates taxes on a transaction.
SuiteTax enables a company to utilize different tax engines to calculate tax for each of your established nexuses.
Each nexus should have a tax registration number on the Tax Registrations sub-tab of the subsidiary record.
Third Party Applications
Whenever considering NetSuite Tax Management, whether you choose to utilize NetSuite SuiteApp (Legacy) or the SuiteTax functionality there are 3rd Party Applications that plugin to NetSuite.
Each of these applications offer additional flexibility and great use features. A few noteworthy 3rd Party applications are listed below:
- Avalara – Supports over 700+ prebuilt integrations into today’s most widely used accounting, ERP, e-commerce, shopping cart, and other applications.
- Vertex – Streamline sales and use tax as you add functions, locations, and channels. Automate tax calculations and updates and leverage hybrid deployment options to mix and match your tax technology to your business needs.
- Thompson Rueter – Complete more returns in less time with leading professional tax software, research and guidance solutions that help you turn your firm into a one-stop, full-service tax, and financial advisory resource for your clients.
Regardless of what NetSuite Tax version you choose and/or what 3rd Party Application you may decide to utilize always do your research.
To learn more about how your business can benefit from any of NetSuite Tax Management offering, PLEASE FEEL FREE TO CONTACT US!
ABACI is a premier NetSuite Solution Provider that provides deep knowledge in both business process and technology architecture.
Our team is passionate about NetSuite and has an exclusive commitment to NetSuite.
We pride ourselves on providing the highest level of system expertise on its full suite of cloud-based business management applications.