Are you paying the correct amount of sales tax to the proper agencies?
QuickBooks Online can handle the mechanics for you. Its sales tax tools are quite simple; they help set up both single and combined (up to five) rates. Then when you create invoices and other sales forms, you can select the appropriate rate(s). The tool does the necessary calculations and includes sales tax in the totals. It also keeps a running tally of how much you owe to taxing agencies.
Bear in mind, though, that absolute accuracy is required for this often-confusing process. States have their own individual requirements, and in some geographical areas, you’ll have to charge county and/or municipal sales tax. So before you start entering rates and charging customers, you should sit down with your accountant and go over issues like:
- Whether you need a sales tax permit,
- How to handle sales in other states,
- What transactions are exempt from sales tax, and
- How often — and to whom — you submit the money you’ve collected from customers.
Figure 3: Once you’ve entered all of your items and/or services and you have a taxable subtotal, QBO will calculate the sales tax payable based on the rate selected.
When you want to see the balance of your sales tax obligation(s) to date, you can run three reports designed to display this information:
- Taxable Sales Summary shows a summary of all of the sales to which you’ve assigned a tax rate in your sales forms
- Sales Tax Liability Report tells you what you’ve collected in sales tax, as well as what you owe to taxing agencies.
- Taxable Sales Detail is a more comprehensive version of the Taxable Sales Summary report. Its columns include Date, Transaction Type, Customer, Quantity, Rate,Amount,and Balance.
When sales taxes are due, you will pay them directly from the Sales Tax Center. Its Sales Tax Owed table will display the amounts you owe and to whom. If they’re recorded as a paid bill or a check, they won’t appear in the Recent Sales Tax Payments table.
We can’t emphasize strongly enough the importance of correctly setting up your sales taxes from the start or of meeting the deadlines that your local taxing agencies enforce. Call us at 256-337-5200 when you want to start implementing this element of QuickBooks Online (QBO). We’re here to make all things QuickBooks easy for you.