October 7, 2019

QuickBooks Sales Taxes Set Up, Part 1

QuickBooks Desktop
Ronald B. Allen

QuickBooks Sales Taxes Set Up

Does your business have a requirement for collecting and paying sales taxes? If so, use the tools in QuickBooks to do this efficiently and easily

State sales taxes are commonly more detailed and complex than any other accounting tasks that you does. But, when you use QuickBooks for the mechanics, it goes easier. However, there are things to learn first about charging and paying sales taxes. Here are some examples.

·        Are the sales taxes you charge based on the state where you do business or are the based on the states from where your customers make payments? (This is referred to as origin-based or destination-based sales tax.)

·        Some services and products are sales tax exempt. Which of yours fall into this category?

·        Are there local, country or city, taxes that you need to collect and pay as well?

·        What is the schedule of payments that you need to follow? To whom, exactly, do you need to submit payments?

You call search for this information on Google if you like. Look for “Department of Taxation” and the state or municipality or “Department of Revenue. You better choice is to contact us for the necessary information. You cannot begin your QuickBooks sales tax setup until you have this information in hand.

Start with These Steps

After you have gotten your sales taxes rules straight, it is time to set up QuickBooks for collecting and paying them. First, open your Edit menu and choose Preferences. Then, click Sales Tax and Company Preferences.  Check the Yes button by Do you charge sales tax? This should be highlighted in order to do your sales tax setup. Now click Add sales tax item. A new window will appear.

In states with sales taxes, you will need to set this up on QuickBooks. City and country taxes may also be required.

The TYPE setting ought to be already on Sales Tax Item. Add an appropriate name for the sales tax in your Sales Tax Name field. A Description will appear automatically as Sales Tax. Enter the Tax Rate (%) as well as the Tax Agency that collects it.

If the agency is not in your QuickBooks, choose <Add New>. Click OK and return to Company Preferences. Add any more sales taxes that you need to. If you have sales taxes that you deal with often, choose it from the Your most common sales tax item selection.

Note: Each one of the sales tax rates is QuickBooks Item. When it becomes necessary to add, remove, change one of them, go the Lists menu and choose Item. Enter sales tax in the Look for menu and Search. Choose the action you wish by right-clicking over your chosen item and you will see a contextual menu.

Sales Taxes by Groups

Sometimes you can take advantage QuickBooks’s ability to group several sales taxes together. To do this, go to Add sales tax item in Company and choose Group. Put in a Group Name/Number as well as a Description.

A table will appear below. In the TAX ITEM column click the down arrow. Choose as many individual tax rates as you need and then click OK. Customers only see the tax total on their invoice, but your reports will break down the details.

Setting Up the Last Preferences

You will need to add information to the Company Preferences page.

Assign Sales Tax Codes
Before you start recording sales tax collections and payments in QuickBooks, make sure that all the information the on the Company Preferences page is entered and correct.

The first couple of items are just field labels. They show if an item needs to be taxed or not. Don’t touch these as QuickBooks sets them up automatically. When you make a check in the Identify taxable amounts as “T” for Taxable when printing checkbox, taxable items will be accompanied by a “T” when printed.

Make sure to click the button to identify whether your business operates on an accrual or cash basis. The WHEN DO YOU PAY SALES TAX section is what you will fill out once you know all of the details of when and where you need to collect sales taxes. Make sure to click OK when this section is finished.

Assign Tax Codes

Every time you create a new item in QuickBooks, you will need to indicate if it is taxable. At the bottom of the screen you will see the Tax Codefield as shown in the image.

Everything that you sell needs to be designated as taxable or non-taxable.

There is a lot to know about sales tax collection and submission. Working with transactions and reports are topics that we will deal with next time. If there is help that you need now with sales taxes, contact us today.

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