In many states, you are required to report the collection of sales tax for a combination of city, county and state, but you want to show your customer a single tax rate. The composite sales tax feature allows you to account for and calculate the tax rates for states, cities, counties or other tax rates that may be applied while only using a single line item.
For example, if we provide service to a customer in the city of Fairfax Virginia, there are 3 different rates to account for. The Virginia state tax is 4.3%, Fairfax city tax is 1% and a Special tax is .7%, this totals out to be 6%. We can create a composite tax to show the three different rates that total out to be 6% for the city of Fairfax without having to add 3 separate line items to a transaction. We simply add a single line item that contains all 3.
Let's set up a Composite Sales Tax!
Click on Settings > Lists > Tax Items
Click Add Tax item
Give the new tax item a name
Add a description for the new tax item
Click the radio dial button to toggle a Composite Tax Item
Click into the field under Tax Items to Combine
Select a Standard tax to be a part of the Composite sales tax
After selecting all the Standard taxes that make up the Composite sales tax, click Add
That's it! You now have the option to select the Composite tax item for any Customer or add it to an Estimate or Invoice.