 Your awards are in the mail! Send us a picture. Here is the subject for the next TopForm TopGun Challenge. Which sales tax update service does TopForm integrate with? Send your answers to Anthony Mullins. Also remember that all correct answers are being entered into the grand prize drawing at our Spring 2003 Users Conference. This is the second in a multi part series coving freight handling in TopForm. This edition will deal specifically with the impact on and the options available to you with regard to Commissions and Sales Tax on freight. Freight Handling and Commissions in TopForm
There are basically two places where freight can be entered during the billing process. The first is the freight "bucket" as we refer to it. The freight bucket can be found on the Invoice Data Entry Screen shown below. When freight is directly entered into this bucket, or when it is automatically carried forward from the freight field in P/O receiving, or from inbound freight on inventory, it normally will be excluded from any commission calculation. On commission reports, the invoice total will include the freight charged, however, the "Net Sale" reported will exclude freight charged via this method. Also, the freight charges will not be included in the sales analysis reports. However, there are times when the company may want to reward the sales person for markups on freight or for billing their customers handling charges. Or, conversely, they may want to make certain that freight costs that are not passed on to the customer are entered into the commission calculation. To accomplish this, freight will need to be entered as a line item where a sell price and a cost can be factored into the commission calculation. These line items can be created manually, or automatically generated using the automatic freight markup feature in TopForm. Freight entered as a line item will be included in the "Invoice Total" and also the "Net Amount" on the commission reports. Also, it will be included in the company's sales analysis reports. This distinction in reporting is important to understand when attempting to compare the totals of various reports. A new TopForm user might call support questioning why the total net sales on the commissions payable report is greater than the postings to the general ledger revenue account(s). If they do not include the general ledger postings for freight charges in their revenue accounts, their general ledger will report less sales than their commission and/or sales analysis reports. If you enter freight charges as line items, you should consider creating a freight revenue account in the revenue section of your chart of accounts. Freight Handling and Sales Tax in TopForm
Similarly, sales tax handling needs to be considered. Is freight taxable in your taxing jurisdiction? If it always is, or if it always is not, your solution is simple. Set the flag in the Sales Tax Code to "Y" or "N" to tax freight. It gets a little more complicated if freight is sometimes taxable and other times, it is not. Under these circumstances, you should answer the above question so that it takes care of the typical handling. In other words, if most of the product you ship is to customers within your state, and under those circumstances, freight is not taxable, then set the flag to "N". However, let's assume that when you ship product from a vendor who is outside your state to one of your customers within your state, freight becomes taxable. If this were the case, you would need to use another method in order to force the calculation of sales tax on freight charges. We will need to use our "line item" freight again. This time, the Special Charge Code that we use will need to be coded so that it not handled as a typical freight charge.
By setting up a special charge code and excluding it as a "typical" freight charge, the rules in the sales tax codes will not apply. Instead, it will look to the rules in the applicable Product Code to determine if this special charge type should be taxable. Answering this question "N" also makes one visible change on your customer invoice. This charge will appear as a line charge within the body of the in voice as opposed to being included in the freight box. By answering this question "Y," any charges attached to this product code could be taxable if the customer or ship to is taxable. Automatic Freight Markup's
Also, even though freight may not be taxable in a particular taxing jurisdiction, markups on freight and/or other handling charges typically are. Be certain you understand the laws governing your taxing jurisdictions before putting any program in place. Next month, we will discuss the automatic freight markup capability in more detail. Within TopForm there is a feature known as "Bundled Pricing." This feature is designed to accumulate and prorate all the line item costs associated with customer owned inventory.
Another particularly useful report for bundled pricing is the Lot Inventory Status Report. (FMR, RJ). This report provides your customer with the following information by lot for each item you warehouse on their behalf.
This provides them with the information they may need to reconcile their inventory and expense accounts. Often times, when your customer pays invoices for the goods you provide and inventory, they will charge the invoice total to an inventory or prepaid expense. Then, as the goods are distributed to their using locations, they charge that location's expense account and credit their prepaid. By providing them with "bundled" reporting, you are providing superior service by making their accounting easier. It is important that you educate your customer on the possibility for minor variations due to rounding however. Please consider the following example. On a TopForm Order, seventeen items are ordered to be shipped into customer owned inventory. At the time of billing, there was sales tax of $40.11 and freight of $39.30.
Your customer debits their prepaid expense account with $696.51. When you receive the seventeen items into customer owned inventory, they are received at a unit cost of $40.97 ($696.51 / 17 items = 40.97117). Assume further that you release three items to one of your customer's locations. The Warehouse Release Report would show that their using location should be charged $122.91 for three items. The Lot Inventory Status Report provides your customer with a recap of the month's activity. It illustrates the following:
As you can see, there is a two-cent variance from the actual invoice cost.
Also, there are certain procedures you must follow to eliminate discrepancies. For more information on this feature, these reporting options and the other reports that are bundled pricing enabled, please contact TopForm Support. Fiscal Year Setup Be mindful that it is now time for many of you to setup your new fiscal year. Fiscal year and periods setup can be done in GLS, option T2. We recommend that you always set up a year or two in advance. Therefore, when you are setting up 2003, set up 2004 also. Please call TopForm Customer Support with any questions. Fiscal Year End Processing Year-end processing on the TopForm system is not difficult, nor complicated. After you have completed entering all the transactions applicable to the year, and have performed your accounting reconciliations, print out your Financial Statements and other reports you choose to keep in hard copy. Then run the G/L, option U2 for the 12th period. This will close the year. It will also roll the ending balances forward to the beginning balances of the new year, and zero out the expense and revenue accounts and roll these into retained earnings. As you probably already know, you do not have to stop processing while waiting to perform year-end. Since TopForm is period driven, your accounting transactions will be held separate from those of the new year. Also, the system administrator, or other operator with the necessary clearance, can reopen the year, if that becomes necessary. 1099 Form Processing We often receive questions at this time of year regarding 1099 forms. Please contact Anita Long in Customer Support and she will be able to provide you with a Standard Flexible Format. WindX In preparation for the TopForm GUI version, it will soon be necessary to replace Tiny Term with a new emulator called WindX. WindX is a free product that can be easily downloaded from the ProvideX website. Go to www.pvx.com then select Downloads, select WindX, then select Plug In. Please contact Robyn Shumaker to ask questions or to receive further instruction. If your operations include kit fulfillment, TopForm may provide a solution to make your business more efficient. The module is called Kit Management and it functions just as it says, managing your kit fulfillment from providing efficient order processing, inventory control and management of fulfillment inventory items. Fully integrated into TopForm Inventory Control, Kit Management is used to identify the components of a 'kit' by item and quantity. As Kits are created for inventory and for sale, you need only specify the number of the kits created. The TopForm Kit Transfer Program relieves the individual components of the kits in the appropriate quantities and receives the Kits into inventory. The cost basis of the Kit is the cumulative cost of the components. As Kit orders are processed, operators enter only the Kit item codes. Inventory status and availability accurately reflects both kitted and individual items. Contact TopForm Sales & Marketing for further information or visit our website at www.topform.com. |
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