ConnectWise Tax Code Setup Table

Tax codes define the rates ConnectWise uses to calculate sales tax on invoices. You can configure a single flat rate (a tax item) or a multi-level rate that posts to different sales tax payable accounts (a tax group). The tax code you assign to a company or agreement determines how that invoice calculates and posts to your accounting package.

Note: Consult your accountant if you are on a cash accrual basis to determine whether down payment and prepaid agreement invoices should be taxed at receipt or at revenue recognition. Taxing these invoices upfront and then invoicing the completed task in a later month can produce a negative sales tax liability balance in your General Ledger.

Match your tax code structure to what is already in your accounting software. If your accounting package uses tax items, use items in ConnectWise. If it uses tax groups, use groups.

Set Up a Tax Code

1. Go to System > Setup Tables > Tax Code.
2. Select New Item.
3. In the Tax Code Overview section, fill in the required fields (see field descriptions below).
4. In the Tax Level 1 section, set the Rate Type and enter the Tax Rate.
5. Fill in the remaining tax level fields as needed.
6. To add another tax jurisdiction, select Add Tax Level + and repeat steps 4–5.
7. Select Save.

Note: Enter Tax Rate as a decimal when Rate Type is Percent. For example, enter 0.07 for 7%.

Tax Code Setup Tab Fields

Tax Code Overview

Field	Description
Tax Code	A unique identifier, up to eight characters. Make each code unique to prevent duplicate errors when integrating with other applications. For non-U.S. QuickBooks versions, the value must match the Sales Tax Code field in QuickBooks and cannot exceed three characters.
Name	A descriptive label shown in the Tax Code drop-down throughout ConnectWise. If you use tax groups in your accounting package, this value becomes the tax group name.
Country	The country for this tax code.
Caption on Invoice	Text that prints next to the tax amount on the invoice. Customers see this, so use something meaningful to them.
Effective Date	The date the tax code becomes available. Invoices created before this date cannot use this code.
Cancel Date	The date the tax code expires and can no longer be used.
Default	Marks this tax code as the default for new companies.
Display each level on the invoice	Prints each tax level separately on the invoice. When cleared, a single combined tax line appears.
Calculate PST on GST (Canada)	Indicates that PST is calculated on top of GST. For Canadian businesses only.

Important: Do not update a historical tax rate in place. Any invoice with that rate that is saved after the update will pick up the new rate, making your tax reporting incorrect. Instead, create a new tax code with the new rate and set an appropriate Effective Date so the code is not available until the rate change takes effect. Add a Cancel Date to the old code, then use Company Mass Maintenance to update the tax code on affected companies before running the next invoice batch.

Tax Level Fields

Field	Description
Level	Each taxing jurisdiction is one level.
Rate Type	Amount (flat dollar amount) or Percent (percentage of the taxable total).
Tax Rate	The rate as a decimal for Percent type (e.g., 0.065 for 6.5%).
Taxable Max	The maximum taxable amount for this jurisdiction, if any.
Caption	A label printed on the invoice for this tax level.
Tax Code Cross Reference	Must match the tax code in your accounting package for GL integration. This field must be visible to edit tax levels. For Sage with Mobius/Gozynta, this field is not used — tax code information comes from the Agency Cross Reference field instead.
Tax Products	Sales tax applies to products. The Sales Tax checkbox on the individual product record must also be selected — both are required for the tax to be charged.
Tax Services	Sales tax applies to services (labor). Clear this to exempt all labor from this tax level.
Tax Expenses	Sales tax applies to expenses.
Agency Cross Reference	The agency code matching the agency in your accounting package.
Apply Single Unit Limit	Taxes only the portion of a product’s price that falls within a defined range. Used in some U.S. states. Only applies to Inventory and Non-Inventory class products — not service or agreement class products.
Unit Minimum	The lower bound of the taxable price range.
Unit Maximum	The upper bound of the taxable price range.

Single Unit Limit Example

A state charges 2.75% on the portion of any single item between $1,600.01 and $3,200. To configure this:

1. Set Rate Type to Percent.
2. Enter 0.0275 as the Tax Rate.
3. Select Apply Single Unit Limit.
4. Enter 1600.01 as the Unit Minimum.
5. Enter 3200 as the Unit Maximum.

QuickBooks Desktop: Services and Products at Different Rates

Note: This section applies to QuickBooks Desktop only. For QuickBooks Online with WiseSync, set Tax Level 1 — omitting it causes sync failures.

When services and products are taxed differently and appear on the same invoice:

• Tax Level 1 in PSA maps to the invoice-level tax item in QuickBooks (applied to the entire invoice). Set Level 1 to 0% if you do not want a single rate applied to everything.
• Additional levels post as line items on the QuickBooks invoice, so you can use exemptions to target specific types.

When taxable services and products with a single unit limit appear on the same invoice, the tax levels must follow this order:

• Level 1 — State tax for services and products
• Level 2 — Local tax for services
• Level 3 and beyond — Local tax for products

Tax Code Exemptions Tab

Use the Tax Code Exemptions tab to exempt specific work roles, expense types, or product types from one or more tax levels.

For each category (work roles, expense types, product types), the tab shows two lists: Taxable and Tax Exempt. Move items between lists using the arrow buttons:

• > — Move selected item(s) to Tax Exempt
• >> — Move all items to Tax Exempt
• < — Move selected item(s) back to Taxable
• << — Move all items back to Taxable

To exempt an item from specific levels rather than all levels, select it in the Tax Exempt list and select Set Exemption Levels. In the dialog, clear the checkbox next to any level you want to exempt. Levels only appear in this dialog if a Tax Code Cross Reference is set on the Tax Code Setup tab.

Note: For fully tax-exempt customers, create a separate tax code with a rate of 0 and assign it to those companies. Map it to a corresponding tax code in your accounting package.

Modify Exemption Levels

1. Go to System > Setup Tables > Tax Code.
2. Select the tax code to modify.
3. Select the Tax Code Exemptions tab.
4. In the Tax Exempt list, select the work role, expense type, or product type.
5. Select Set Exemption Levels.
6. Clear the checkbox next to the level to remove its exemption.
7. Select Save.

Tax Code Cross Reference Tab

The Tax Code Cross Reference tab maps line-item tax codes between ConnectWise and QuickBooks. Without this mapping, QuickBooks uses its default tax code — which is usually fine in the U.S. but incorrect for Canada and Australia, where multiple codes (GST, PST, HST, etc.) are common.

To add a cross reference, select New Item on the tab:

Field	Description
Description	The name of the cross reference. Must match the tax code name in QuickBooks.
Level 1–6	Set each level to Taxable or Non-taxable.
Default	Marks this as the default cross reference.

Note: If all taxable detail lines using this PSA tax code share the same QuickBooks tax code, you only need one taxable cross reference — mark it as the default.

Tax Code Hierarchy

When you assign tax codes at multiple levels (company, agreement, billing site, shipping site), ConnectWise follows a priority order to determine which code applies on an invoice.

Note: When the billing site and shipping site have different tax codes, ConnectWise uses the tax code from the shipping site.