Being a QuickBooks user you may always require setting up sales tax for collecting taxes for the goods and services offered. QuickBooks support helps you to easily monitor and remit them by keeping an accurate record of the taxes. Ensure to check the tax rates and requirements with your tax agency before setting up sales tax items in your QuickBooks.
Follow the given steps to start recording sales tax in QuickBooks
- Open QuickBooks, and select preferences from the edit menu.
- Select sales tax from the left menu of the preferences page and go to the company preferences tab.
- Click yes to charge the sales tax.
- Click on add sales tax item. The item is used to add and calculate tax charges for a taxable sale.
You can create a new sales tax item by choosing a sales tax item from the drop-down field and entering the name and specific tax of the item. Enter the name of the collecting agency and click ok.
Or if you want you can edit the already existing sales tax item as well.
If there are multiple sales tax items on a single sales transaction, you need to set up a sales tax group.
- To track taxable and non-taxable sales/or customers, assign sales tax codes. It allows you to run a divided report for total taxable and non-taxable sales.
- Set the sales tax basis to accrual or cash.
- set the sales tax preferences for paying (monthly, quarterly, and annually).
- Click ok.
Once the sales tax has been set up on your QuickBooks you can easily create taxable sales. Sales tax will be automatically charged and calculated when the invoices, receipts, and other sale forms are created.
Areas you must know that are associated with sales tax:
- Item tax code: you can track the taxable status of an item using the code. The code is automatically populated from the one that you assigned while setting up the sales tax item.
- Tax item/group: the group set up displays corresponding tax rates for the items/groups.
- Customer tax code: automatically populated with the tax code assigned to the customer during set up and helps to track the taxable status of the customer.
Tax rate, customer or item tax code for a specific sale can be changed if required. The change made will be applicable to the specific sale and will not affect the setup for item or customer.
Contact the QuickBooks support team if you want to change the item tax code, tax group or customer tax code for any specific sale. Our toll- free number is 1 (877) 227 2303.
Reviewing sales tax report
The sales tax liability report contains a summary of all the collected tax and the tax to be submitted to the tax agency including;
- A total of taxable sales
- A total of non-taxable sales
- Sale tax rate
- Total sales tax collected
- Sales tax payable
Note: the total tax collected may mismatch with the sales tax payable column since it also includes the payments made by you. to get the sales tax payable, deduct the payments you have made from the total tax collected.
Total taxable sales multiplied by the tax rate gives you the tax collected from your sales transactions.
You can access the reports by choosing reports > vendors & payables > sales tax liability.
To access sales tax revenue summary report
Go to reports > vendors & payables > sales tax revenue summary.
The report contains a summary of the sales tax code and sales by the tax agency. Also, you can get the total sales for each tax code which helps you in preparing sales tax form.
Paying sales tax
Always run a sales tax liability report before paying your sales tax so as to get the appropriate information to fill your state/provincial sales tax form. To avoid errors in sales tax reports and bookkeeping, do not use write checks or pay bills windows instead use the pay sales tax window in order to create sales tax payment in QuickBooks. It will show you the sales tax amount for each sales tax item you use and adjustments needed to apply (if any).
Steps to pay sales tax:
- Go to vendors >sales tax > pay sales tax.
- Select the checking account from the pay from the account drop-down list. The drop-down will only show the bank accounts.
- Check the date and mark the show sales tax due through the field.
- Match the check number in the starting check no. field.
- The list displays all the sales taxes for your company, sales tax payable to the agency and the due amount.
Check your sales setup if the list is empty.
- Go to the amt paid column to make a partial payment and type the amount for each tax item on the list.
- To make a payment for all the taxes due, click on pay all tax.
- Click on adjust to make adjustments for a credit, fine etc.
- To get a print or handwrite the checks later, check the ‘to be printed box.’
- Click ok.
Use the agency’s sales tax payable account register to check the sales tax transactions or add memos.