Taxes: Rounding Variances

By Michael | Updated


Or why the current reported tax is different on the sales summary report.

The rounding variance shows the difference in taxes reported from the Sales Summary and the taxes sorted by tax rate in the Tax Report. The Sales Summary reports on actual tax collected from customers on each order. The tax collected from a customer is the tax on sum total of sales calculated to the fourth digit and then rounded to the second digit. In order to break down taxes by tax rate, the Tax Report is ran against taxes on individual items, calculated to the fourth digit, summed and then rounded to the second digit. These different calculations necessarily involve small differences due to rounding.

   For example: Imagine an order of a single item with a tax of 4.4950. The customer will pay 4.50 in tax. Multiply that order times 10 and the Sales Summary will report 45.00 in total taxes collected. On the Tax Report these orders and items return a result of 44.95 (tax of 4.4950 x 10 items is 44.95 in total tax). In this example the rounding variance is .05. The example is extreme. Generally speaking these rounding variances even out.

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