A compound tax is a tax stacked on top of a primary tax. This is different than just applying two different taxes to an item. Here's an example:
Applying two Different Taxes
Item Cost: $100.00
1st tax of 5%: $5.00
2nd tax of 10%: $10.00
Total: $115.00
Applying Compound Taxes
Item Cost: $100.00
Primary tax of 5%: $5.00
Subtotal: $105.00
Compound tax of 10%: $10.50
Grand Total: $115.50
To apply compound taxes in LessAccounting, you'll need to first figure out your subtotal, then apply a tax (as set in up Settings > Sales Tax) to that amount. In the sample above, you can compute for your total using the following formula:
Grand Total: $115.50
Total Taxes Applied: $115.50 - $100 = $15.50
Total Tax Percentage: $15.50 / $100 = 15.5%
This means that if I have 5% and 10% as my compound taxes, the total consolidated tax percentage to represent that is 15.5%.