Flowhub has been committed to accurately calculating taxes on every transaction made on our platform since we were first founded in 2015. We understand just how critical it is for our clients' business to have confidence in the tax information in their Analytics, and we take this very seriously.

This article answers some commonly-received questions on how Taxes are calculated in Flowhub.

Taxes are calculated individually for each product in a Transaction, to ensure that we are collecting the correct value of tax for every item sold in every transaction at the time of the transaction.

In Pricing & Taxes, you have the ability to configure whether a Tax should apply to the Customer Type (Med vs Rec), and the Category (i.e. Accessories vs Flower). Each of these parameters of this is referenced in the cart when an item is added and taxes are calculated.

One frequently-asked question we receive on taxes is why aggregate sales data multiplied by a tax rate doesn't seem to match the actual taxes collected in Analytics reports. This has to do with how we calculate taxes for each individual item in a transaction, and whether there are any fractions of pennies that are calculated as a result.

In any situation in which a tax rate calculation results in fractions of pennies, Flowhub will round to the nearest penny value when calculating the tax (rounding up or down based on the value in the thousandths field.)

Here's how this can play out with a real-life example:

Let's say we have an item that is sold for $5.93 pre-tax, and there is a Tax rate of 5.5% set up to be levied on this item.

Since we're not able to ask a customer to pay 0.00615 of a penny at checkout, Flowhub will round up this calculation to the nearest whole penny value.

Here's how that plays out in the cart:

Above, we saw how tax is calculated individually in a cart, and how tax rates are rounded individually at the item level to the nearest penny when applicable.

Now let's compare that math to aggregate sales or revenue of all items that receive this 5.5% tax rate, and how our "napkin math" may not equal exactly what we see in Flowhub Analytics.

In the below example, our End of Day report shows that we've made $7,569.98 in Cash Sales, which breaks down to $7,175.33 in Total Revenue and $394.65 collected in Taxes.

If we do "back of the envelope math" of calculating our taxes using the Revenue and multiplying by the Tax rate, we'll get a different outcome than what our report tells us, because the penny rounding is not being accounted for.

In our reports, however, we can see that the actual taxes collected in Flowhub was $394.65 - a difference of a penny. That extra penny is due to the penny rounding calculations that have taken place over each individual sale; that's the overcollecting that's happening on the individual item level to ensure you are never in a position where you are not collecting enough taxes.

Over time, with increasing numbers of sales at your store, this variance may grow; but it will always come back down to 1) tax rates calculated on individual items in each transaction, and 2) any penny rounding when we have fractions of a penny calculated in tax rates.

If this article does not answer your questions, or you have another question on your taxes, please feel free to reach out to our Product Support team. Our support hours are seven days a week, Monday through Saturday 8 AM - 8 PM Mountain Time & Sundays 9 AM - 6 PM Mountain Time.