Please note that if you use nested customer:jobs on your customer list, default sales tax items can only be applied at the customer level, not at the job level. To account for this, we can set up a default sales tax item for each customer. Some customers may even be exempt from sales tax. As we learned above, QuickBooks needs to know your most common sales tax item to have a default, but we also know not all customers may be charged the same sales tax, depending on your location, their location, and the tax laws involved. Now that we’ve got our taxes set up, let’s look at how we use them elsewhere in QuickBooks. What Happens When Using Sales Tax in QuickBooks You’ll also tell QuickBooks whether you pay your sales taxes monthly, quarterly, or annually. You’ll choose whether you owe sales taxes as of the date of a customer invoice (accrual basis), or the date you receive payment from a customer (cash basis).
#Quickbooks pay sales tax how to#
It’s uncommon to use more than these two sales tax codes, so if you have more than that you may want to check with your bookkeeping or accounting professional to confirm which you should set here.įinally, you’ll tell QuickBooks about how to handle some of your sales tax dates. Typically, these will just be Tax and Non, respectively. QuickBooks requires that you choose a most common item so that it knows what tax rate to default to on transactions for customers who are listed as taxable.īelow this, you’ll select the sales tax codes (different from sales tax items or groups) that determine if items on your transactions are taxable or non-taxable. If any changes need to be made to individual rates within the sales tax group, you’ll need to edit the sales tax items themselves.Īligning Sales Tax Items with Sales Tax Preferencesīack on the Sales Tax preferences screen, once you’ve got at least one sales tax item created, you can select your most commonly-used sales tax item or group. Below these lines, you see what the total of the combined taxes in this group will be. Rather than setting the details in this window, you’ll add sales tax items you’ve already created to the lines in the bottom section of this window by selecting them from the drop-down, one per line. Just as when setting up a sales tax item, you’ll enter a name, a description, and a barcode number if applicable. Once you’ve created all the taxes that will be in a group, you can then create the sales tax group, which is another item type. You’ll still create individual taxes as outlined above. Using these, you can tell QuickBooks that a given set of sales taxes should all apply together, allowing you to select the sales tax group as a single rate on transactions while still ensuring that the individual taxes are separately tracked as they should be. QuickBooks thankfully provides us a simpler solution, in the form of Sales Tax Groups. You could manually add sales taxes as line items to transactions, but doing this for every tax on every order is cumbersome and leaves openings for errors to slip in. How do we handle this in QuickBooks? While it would be possible to create one sales tax item for the combined 10% of the taxes above, we’re left with the problem that we can only assign a single tax agency to a given sales tax item, so if these taxes go to different agencies, or if they must be reported separately, this can cause a problem. Your state may charge a 6.5% sales tax, your county might charge an additional 2%, and your city may have yet a further tax of 1.5%. In many cases, more than one sales tax rate may apply to a purchase. There are some other features in the Manage Sales Tax window as well, which we’ll go over in more detail further down. The first button in this window will open the Preferences window directly to the Sales Tax section. You may also choose to open Vendors > Sales Tax > Manage Sales Tax. The sales tax settings can be accessed in two ways, though they both lead to the same area.įirst, you can simply open the Preferences window from the “Edit” menu and choose the Sales Tax section from the left column. Making your sales tax collection and payments into a simple process starts with setting up a solid foundation of correctly set-up sales tax items and settings. The process of correctly collecting, recording, and paying these sales tax liabilities can be somewhat daunting at first, but QuickBooks has some tools built in that can help this go more smoothly. QuickBooks Inventory Tracking to FishbowlĪ variety of businesses must collect sales tax as part of their business operations, remitting those funds to the appropriate government agency on a predetermined schedule.
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