Sales tax has a vital role in QuickBooks. It is required for the goods and services that you provide to your customers. By using the sales tax service in QuickBooks, you can record taxes and it will be easier for you to monitor and set them aside for the tax-collecting agency. If you want to learn how to set up sales tax in QuickBooks Online and Desktop, this guide is all you need.
This guide demonstrates step by step instruction for creating sales tax within your QuickBooks account as we cover the following topics:
Every business owner needs to collect a combination of PST and GST (or GST only) or HST only based on the rules of sales tax.
As is well known, QuickBooks allows you to set up the sales tax so that you can keep the proper record. There are other benefits to setting up the sales tax in QuickBooks. A couple of them are listed below:
As you are aware of the advantages, you can proceed with the sales tax set up. However, there is the information needed to set up sales tax in QuickBooks Online and Desktop. Continue reading to know more.
Must Read: How to Record a Loan Payment in QuickBooks
Before you know how to set up sales tax in QuickBooks 2013, one should keep the following things into consideration:
Special Note: QuickBooks sets all the provincial and standard Sales Tax Codes depending on the information of the company you mention in the Express Start Interview while you create a company file.
For instance, if you are in the domain of Ontario and registering for the Sales Tax then QuickBooks will add a tax code that eventually calculates and then shows Ontario HST (H) and Ontario PST (P).
To set up the sales tax for your business, you will have to follow the procedure in a number of steps. For instance, you will first have to set up your sales tax preferences, set up the tax agency, set up sales items and groups, assign tax codes for items and customers. If it is required to charge sales tax for the additional province then you can do that too.
In this following guide, we will show you how to set up sales tax in QuickBooks Desktop and QuickBooks Online. So let’s get started!
Must Read: How to Record Daily Sales in QuickBooks Online?
The first and foremost step is to set up your company preferences for the Sales Tax. To do so, follow the instructions given below:
Note: The code for sales tax (that is assigned to your supplier or customer) has the priority for the sales tax codes for the services and products.
Once you are done adding your preferences for the sales tax, you can start creating the tax agency. Read more in the next step.
In this step, you are required to create the tax agency for the location where you are planning to pay the sales tax. To make this happen all you have to add a sales tax agency as your supplier.
Once you change the sales tax codes, QuickBooks automatically sets up the sales tax agencies as your suppliers. This must be linked with the same tax code.
Note: Each sales tax code and item are linked with a sales tax agency. This helps you to make sure that the sale tax you are collecting is getting paid to the right tax agency.
In case you have no idea how to add a tax agency in QuickBooks, you can go through the following instructions:
Note: QuickBooks will track your balances and sales tax payments depending on the customer sales tax collections and opening balance. Once you collect your sales tax from the customers, the amount that you owe starts increasing.
This is how QuickBooks update the opening balance so that it can reflect the sales tax amount you deposit with your tax agency.
After following these steps, the tax agency will be created successfully. Thereafter, you can track payments and balances easily.
In QuickBooks, sales tax items are used to count the sales tax on transactions. It also associates with the right sales tax agency. Thereafter, the counted tax follows the accountability for that particular agency.
Here, in this step, we will show you how to add sales tax items and rates. Along with that, you will learn to set up sales tax group items.
QuickBooks creates the sales tax items that can be used in the field where the business is situated. In case you ever have to add additional sales tax items then you can go through the following steps:
Note: This name can be seen by the customers on their invoices or forms.
Many fields use an S sales tax code. This represents a sales tax group that combines PST and GST items. When you use the S code in the transactions, both the taxes charged and calculated however they track to separate accounts.
If you want to charge over one tax then you can combine the sales items. To understand better, you can follow the steps mentioned below:
Note: Make sure that you set up all the single sales tax items that will be required to set up your sales tax group items.
Note: The description cannot be edited on the forms. Also, the group rate including the combined sales tax items rates will be printed on the sales forms.
Similarly, you can do this to add more sales tax items to your group. Once done, click the Ok button. This is the whole procedure of creating a sales tax group and rates. Now, you can set the code for the sales tax. Read ahead to know more.
As is well known, QuickBooks set up sales tax codes based on the field where the company is located. Below are the few provinces that use sales tax codes accordingly.
Now that you know about codes for sales tax, you can add them for the items and customers. Let’s know how to do that in the following discussion.
In case you ever require to edit the code then this can be done in the item list. Follow these steps to understand better.
This is how you can add the new sales tax codes based on the preferences for items and edit them if required in the future.
Most customers are taxable in QuickBooks. However, you can create a tax code for the customers individually. Here we will show you to add tax codes for customers using the customer menu and sales tax menu.
These are the two simple ways to add tax codes for customers. You can pick your option and follow the steps carefully.
In case you ever have to charge sales tax for the additional province then you can easily add sales tax codes, sales tax agencies, sales tax items, and sales tax account for that particular province. To do so, you can follow the steps mentioned below:
Once you follow these steps, the tax code and the tax agency will be generated automatically. This is an easy way to create or manage the sales tax for more than one province.
If you use QuickBooks Online then you can set up the sales tax. All you have to enable the Sales Tax feature within QuickBooks Online and then turn on the Sales Tax service in the Commerce Sync Settings. Let’s know how to set up multiple sales tax in QuickBooks Online in two simple steps.
These are two simple steps to create sales tax in QuickBooks Online. All you have to turn on the sales tax feature and then enable the sales tax in Commerce sync settings to transfer sales tax.
This is all about creating sales tax in QuickBooks!
To Sum Up
Sales tax serves an important purpose in business. If you manage your business via QuickBooks then it is very easy to set up the sales tax for your customers. In this guide we have shown you how to set up sales tax in QuickBooks Online and QuickBooks Desktop.
The steps can vary for both the QuickBooks version. For instance, for the QuickBooks Desktop, the procedure includes numerous steps such as setting up the sales tax preferences, tax agency, sales items and group, assigning tax codes for items and customers. If it is required to charge sales tax for the additional province then you can do that too.
On the other hand, for QuickBooks Online, you can enable the Sales Tax feature within QuickBooks Online and then turn on the Sales Tax service in the Commerce Sync Settings.
If you have any questions, let us know in the comment section.
Apart from this, if you want to know how to delete a customer in QuickBooks then read this guide in detail.