Rounding Enhancements

Overview

Varying tax rates are a challenge for every business. The sales tax in Albuquerque, NM, the home of Lavu, is 7.875%. The sales tax in Southampton, New York is 8.63%. With tax rates like these, rounding the amount of money collected at checkout is mandatory. Percentage discount rates add another reason for rounding the receipt total.

In addition, when a user splits a check evenly the amount could be rounded again, causing the total cost of the order to be more than it was before being split. Think of a total order of $9.99 being split evenly between two customers. $9.99 divided by 2 is $4.995, rounded to $5.00 for each customer.  This article explains how Lavu calculates taxes, discounts, and splitting checks to minimize the effects of these issues.

It is important for you, the business owner, to know how the Lavu POS calculates taxes at the item level. Ultimately, it is your responsibility to ensure you are meeting tax obligations. Consultation with a tax expert is highly recommended.   

For information on how to set up a tax profile for your business see Section 5.6: Tax Profiles.

Tax solution

The tax rate will be applied to each item individually and rounded to the closest penny.

Example:

Item-Level Tax
Item 1: $5.51, 9% tax
Item 2: $5.51, 9% tax

Tax on Item 1 = $5.51 x 0.09 = $0.4959
Item’s tax is rounded to $0.50

Tax on Item 2 = $5.51 x 0.09 = $0.4959
Item’s tax is rounded to $0.50

Total tax collected on sale = $1.00

Half-even rounding

When an item has a tax amount that landed exactly on 0.005 (half a cent), the app will round to the nearest even number.

Example:
$0.495 rounds to $0.50.
$0.485 rounds to $0.48.


Splitting logic

If the price of an item or order was split evenly, and it did not divide evenly by the number it was attempted to be split into, the remainder should be distributed to each order or item until there is none remaining.

Example:

$11.00 item is split evenly 3 ways. 11.00 / 3 = 3.666666666.
3.666666666 is rounded to 3.67.
3.67 * 3 = $11.01 which means the trio was overcharged by a penny in this scenario.

Instead of dividing the full amount by 3, and then rounding, we should calculate the item price down to the nearest penny, and then add the remainder to each split until there wasn’t a remainder left.

$11.00 / 3 = $3.66 + $3.66 + $3.66 remainder $0.02. The $0.02 would be distributed a penny at a time to the other $3.66 until none remain. $11.00 / 3 = $3.67 + $3.67 + $3.66. Tax would be treated the same way. Meaning tax would be calculated at an order level instead of being calculated at a check by check level.

Tax included in item price example splitting

Subtotal: $9.32
Tax: $0.68
Total $10.00

Split * 3

Check 1
Subtotal: $3.11
Tax: $0.22
Total: $3.33

Check 2
Subtotal: $3.11
Tax: $0.23
Total: $3.34

Check 3
Subtotal: $3.10
Tax: $0.23
Total: $3.33


Discounts

All discount values will round down and be subtracted from the item’s initial cost to give us the item price. This will be done on a per item basis instead of check level. 

Item 1 $5.99, 50% discount
Discount amount $2.99
Item price after discount ($5.99 - $2.99) $3.00



 

 

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