We create point of sale software for the mac, and are looking to revamp our tax engine. It's pretty simple now, with taxes consisting of a name, code and rate that can be applied to every product individually. While this is good enough for some people, we've had lots of requests to handle more advanced situations. Some examples are US City/County sales tax, Canadian compound (stacked) taxes, French ecotax and NYC luxury tax.
We've identified most of the characteristics that these taxes have and are leaning towards a sort of rule-engine based implementation. We don't have to support every case out there, but we want to be able to extend it if needed (to avoid another rewrite).
We're looking for advise from people who built something like this before, or examples of projects that try to solve the same in an elegant way.
My suggestion would be to use database tables for what they are good for (storing values) and rules for what they are good for (business logic). I would certainly not put things like tax rates or lists of jurisdictions in rules - those should be in tables. What I would use a rules engine for is defining the logic that determines which rate to apply to which transactions. So, for instance, if I buy a set of products online from a company based in State X that ships from State Y to three different locations, what tax rates apply to which parts of the transaction?
This combination of rules and database tables is very common - the rules make sure you look up the right things while the tables aid in reporting etc. For instance, the California DMV did this with vehicle registration fees - all the various fees are stored in a database while the rules that determine which fee applies to which car are managed in a rulebase.
If you try and put everything in rules you will not be able to report well and if you try and put everything in database tables you will end up with dozens of tables to manage all the exceptions and corner cases.
JT
I would recommend a set of database tables and joins.
Example:
Jurisdiction: list of states, counties, countries, cities, etc.
Product: obvious
Store: list of locations you sell from
StoreJurisdiction(StoreID, JurisdictionID): the list of Jurisdictions the store is
responsible to collect taxes for
ProductTaxCode(ProductID int, TaxCodeID int): the type of product for the purposes of taxes: basic, luxury, etc.
JurisdictionTaxCodeRate(JurisdictionID, TaxCodeID, InterestRate, RateType): for each applicable combination of Jurisdiction and Tax Code, provide the tax rate to be applied, and the type of rate (compound, simple, etc.).
To find the list of taxes to apply, all you need is an INNER JOIN of the store, its jurisdictions, the jurisdictiontaxcoderates for those Jurisdictions, and the product's tax codes.
You could define ProductTaxCode as a View so all products receive a default TaxCode unless a special one is provided. By abstracting TaxCode, you can have the same metadata about a product ("Food" for instance) apply to different regions in different ways. If a particular jurisdiction has its own definition of "food", you just add a jurisdiction-specific code and apply it to products as needed.
This may require some tweaking for Internet purchases, wholesale purchases, and other situations where the sale is somehow exempt from taxes or the customer is responsible for remitting them. It would also need tweaking for situations where the customer's location, rather than the store, decides the tax rate.
Other tweaks: here in Texas, for instance, we have a "tax-free" weekend where state and local taxes are not collected on some classes of products where the individual item's sale price is less than $100. The idea is to provide cheaper school supplies, clothing, etc. for children heading off to school for a new year. This sort of tweak could be implemented by having a date range table for each JurisdictionTaxCodeRate going off in the future as far as they can be planned.
Here is an example of a "home rule" city in the Denver, CO metropolitan area:
http://www.c3gov.com/pages/about/division_salestax.html
You, as a retailer, may also need to send the tax payments to different locations. For cities that are not "home rule" cities (which is a special term that probably only applies to Colorado, but then probably every state has some equally special term like it), you'll send all the tax payments to the state who will then deal them out to the relevant parties. Colorado has a feature where there are "special tax districts" that are permitted to collect sales taxes for certain benefits (on the example link, RTD is the public transportation district, and "Invesco Field" is the stadium where the Denver Broncos play).
To expand upon Mr Tallent's answer on this thread, you'll need to also include in the Jurisdiction table some way of representing that the taxes may go to different places.
Related
To create an accounting report (such as Income statement/Balance sheet/ Cash flow statement), certain accounts have to be considered, for an income statement we need to consider the revenue, depreciation, cogs, interest, tax,... and so on.
My qestion is for an accounting software to generate the report, there is a critria/algorithm to use to pick the right group. How would this be approached?
surely not enumerating all the possible accounts, since those will just be names, and can be any value,
Enumerating the the tree then? enumerating the right part of the chart of account tree? This implies some rigidity in the initial setup of the tree, making sure every new account falls somewhere in the current tree (Assets/Liabilities/EQuity/Income/Expense)?
For a report like the income statement this is more involved since the income related to operating activities has to be distinguished from investing and financing, can this be distinguished in software simply from examining the right part of the chart of account tree?
Yes, it can be distinguished in software simply from examining the right part of the chart of account tree
Let us assume there is a situation when I have an invoice from a supplier to my company (e.g. 1000 EUR). My company returns all the goods because of a problem. The supplier shall issue a credit invoice in amount of 1000 EUR, which I register in my system. As a result I will have (on behalf of the supplier) an account payable of 1000 EUR and an account receivable in the same amount. What is the preferred way of handling this situation, because there will be no money transferred, either way.
Should I generate a paymentApplication to both invoices? I want to see them as +1000 -1000 = 0 EUR.
The current data model and services do not support applying an invoice to an invoice, i.e. canceling part or all of one invoice with another. That is something I have considered but IMO is messy... even if it is a common practice in certain parts of the world (from my limited knowledge of it an archaic practice that isn't so commonly used any more). That could be supported though, I have certainly considered it (adding an entity or perhaps modifying PaymentApplication to support it, adding a service to do it and a corresponding GL posting service to balance AP/AR accounts).
Right now the best thing to do a cancel the original invoice, which does the proper reverse GL postings if the invoice has already been posted.
If you want both invoices in the system and canceling entries somewhere the currently supported approach is to use a FinancialAccount, basically use FinancialAccount payments to pay both invoices and then the balance of the FinancialAccount represents the amount due or owed to the external party. There is full support for these sorts of FinancialAccount transactions, doing payments both ways (withdrawals and deposits), representing the liability for positive balances in the GL, etc.
I have hear from the some where the char of account is used based on the different country it means that the char of account used based on different different country and analytical account is used as in service type of products.
I don't know am i right or wrong.
Please clarify me in depth which situation we are using the chart of account and which is not and which situation we are using the analytical account in ODOO (Formally) and which is not.
In principle, accounts that made up the chart of accounts are taken into general ledger posting i.e used to prepare BS, P/L etc, while the analytical accounting are mainly used only for companies internal use and doesn't affect anything in real accounting.
The general accounting system is a legal obligation. It must conform to certain accounting principles and must represent a fair picture of the financial situation of the company by producing a balance sheet and a profit and loss statement. Its foundation is the Chart of Accounts, made up of eight classes. Classes 1-5 are balance sheet accounts and classes 6 and 7 (expenses and revenues) are used for the profit and loss statement. All journals and accounts post to the General Ledger.
The second accounting system used in some countries is called Analytical Accounting. Its main purpose is to track expense and revenue accounts by categories in order to derive profit and loss by activity. Its foundation is a separate Chart of Accounts made up of a single class (class 9). Its journals and accounts post to a separate ledger (the Analytical Ledger.)
Some European countries use two types of accounting systems. (The United States and most other countries use only one.)
The chart of accounting will differ from country to country. For example US uses Account receivable and Account payable accounts which is equal to Debtors and Creditors accounts in Indian accounting. So Odoo keeps the chart of account based on the country.
Chart of Accounts are real accounts used for legal Purpose but Analytic Accounts are Just like same but only for Analysis Purpose like Budget Management Purpose etc.
I have searched and searched but to no avail... has anybody created a payroll module for a U.S. based company? It seems that most of what I've seen is that companies are using payroll companies to process their payroll, but I haven't found anybody using OpenERP 7 for hourly employees with the U.S. tax system (it's not a flat tax rate).
It seems like what I may have to do, is create tax table in PostgresQL for federal, state, and local taxes, then reference those tables in the deduction calculation. I read one article on using the vendors/ or suppliers module and implementing a tax structure from that, but then again, those are still flat rates. I have to believe someone else has done this for the U.S. payroll system, and probably done it better than I could as I am fairly new to OpenERP.
I am in the process of doing something similar for LedgerSMB. The thing is that doing this on an open source model is extremely painful business-model-wise. I am working on solutions to that part but that's outside the scope of your question.
In general many US taxes are set up in marginal rates with certain minimums and maximums. For example income tax withholding is a set of marginal rates within tax brackets. Same with FICA and FUMA, but FICA taxes are capped at a certain level, so a simple tax table with rates, minimums, maximums, etc. and then a way of handling deductions to determine the correct line may be sufficient.
But users of most open source ERP's use third party services for payroll.
I have worked in an ERP. How we did is just calculate the FIT in yearly for all the employee and subtract the withholding amount with multiples.
FIT => Taxable Wages Yearly - (No.of withholding(Exemption))
Do the process as per the revision based on single or married only for annually. No need to update all the tables.
Then,
Divided it based on the frequency from the employee table information
EX:
for monthly : FIT/12
for daily : FIT/365
For SIT you have to use based on the document in the state usine case function.
I am making a small personal application regarding my trade of shares of various companies.
The actions can be selling shares of a company or buying. Therefore, the details to be saved in both cases would be:
Number of Shares
Average Price
Would it be better to use separate tables for "buy" and "sell" or just use one table for "trade" and keep a field that demarcates "buy" from "sell"?
Definitely the latter case - one table, simple one field (boolean) defining whether it's selling or buying. You should define tables by entities, not by actions taken on them.
This is actually a tricky one. The table you're talking about is basically a trade table, detailing all your buys and sells.
In that sense, you would think it would make sense to have both buys and sells in a single table.
However, in many jurisdictions, there is extra information for a sell order. That piece of information is which buy order to offset it against (for capital gains or profit purposes). While this is not necessary in a strict first-bought, first-sold (FBFS) environment, that's by no means the only possibility.
For example, under Australian law, you can actually offset a sale against your most recent purchase, as long as you have the rationale written down in clear language before-hand. Even though my company follow FBFS, I am allowed to receive bonus issues or supplemental shares which I can then sell immediately. These are offset against the most recent shares bought, not ones I've held for X number of years (this is often handy to minimise taxes payable).
If you follow a strict FBFS, then you don't need that extra information and your trades are symmetrical. Even where they're not, I've implemented it in one table with the extra information, useless for buy orders of course. That seemed the easiest way to go.
You could do it as two asymmetrical tables but that makes queries a bit more problematic since you often need to pull data from both tables. My advice is to stick with a single table with the extra information if needed.
I would also never store the average price. I prefer the quantity, the price per share and the brokerage costs. Every other figure can be calculated from those three, for example:
AvgPrice = (Brokerage + SharePrice * ShareQuant) / ShareQuant
but it's sometimes impossible to work backwards from just the average price, since you don't know what the brokerage was.
And I wouldn't have a boolean for buy/sell, it's just as easy to use negative numbers for the sell orders and it makes balance-sheet-type calculations a lot easier since you just sum values irrespective of the order type instead of needing to negate some of them depending on that order type.
Update: If, as you seem to indicate, you're only going to store aggregate information for each company, I would go for the following:
Companies:
CompanyId primary key
CompanyCode indexed
CompanyName
CompanyBuyQuant
CompanyBuyAvgPrice
CompanySellQuant
CompanySellAvgPrice
then you update the individual columns depending on whether it's a buy or sell. You don't need a separate row for the buy/sell stuff. When the company is first added, both quantities and prices are set to 0.
Your entity is now the company so this makes more sense. One thing you may want to consider is to store the aggregate values of shares bought and sold rather than the average buy and sell prices. That will simplify your update calculations and you can still easily get the averages by dividing the aggregate by the quantity.
So, the following table:
Companies:
CompanyId primary key
CompanyCode indexed
CompanyName
CompanyBuyQuant
CompanyBuyValue
CompanySellQuant
CompanySellValue
When adding a company, set all quanities and values to 0,
When buying M shares at N dollars each, add M to CompanyBuyQuant and N * M to CompanyBuyValue.
When selling M shares at N dollars each, add M to CompanySellQuant and N * M to CompanySellValue.
Get average buy price as CompanyBuyValue / CompanyBuyQuant.
Get average sell price as CompanySellValue / CompanySellQuant.
I'd go with a single table.
You can use negative quantities to indicate a sell. This is a fairly standard sort of indication. Subtraction is the same as adding a negative number!
One table. Each row/item is a trade, whether it's buy or sell.
Also, the aggregate of the quantity column will give you your current position. And cash too (-1 x quantity x price**) aggregated.
Buy or sell if inferred by the sign of the quantity: no need for separate column, unless you want to make a computed column derived from quantity.
**cash: When you sell (negative quantity) you get cash back (positive cash), hence -1 multiplier in case anyone wonders.
"Trade" can be ambiguous and it's not entirely clear to me what you want to do here. Are you interested in storing only your current position in each share or also the history of transactions that show how the position developed?
If you just want to record your holding ("position" might be a better word if you can be short) then I'd simply record for each share the number held. You mention average price, but I'd be cautious about that if you expect at any time to be able to sell part of a holding. What's the average price if you buy 100 at 50, 100 at 60 and sell 50 at 70?
Unless you expect your buy and sell transactions to number in the millions, I'd be more inclined to record each individual purchase or sale as a separate row in a single table and show the totals on demand as the derived results of a simple query.