As part of the planning for your Dynamics GP setup, you will need to determine whether sales and purchase taxes should be calculated and tracked by the system. Even though the concept is the same, sales and purchase taxes must be set up separately, as a tax in Dynamics GP can only be one or the other. Many small and mid-size companies in the US choose not to track purchase taxes separately. However, any business selling goods or services will often need to collect and remit sales taxes to each state they do business in and have detailed records for state reporting purposes.
Setting up taxes in Dynamics GP involves the creation of Tax Details and Tax Schedules. Tax details are the lowest level of taxes a company wants to track; tax schedules are a combination of one of more tax details that are used together to calculate the total tax for a transaction. The same tax detail can be used on multiple tax schedules. Tax schedules are assigned to customers, vendors, items...