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%.