A Primer on Managing Sales Tax in QuickBooks

If you make sales from within more than one sales tax district, QuickBooks provides you an easy solution to charging, reporting and paying sales tax to multiple taxing authorities in multiple states.

I just went through this with clients who operate from a single location but sell services through trade shows all over the country. While QuickBooks allows you to set a default sales tax “rate” as a sales tax preference, you can select a different “rate” in the “Create Invoice” or “Create Sales Receipt” form.



When I refer to a sales tax “rate” I really mean either the tax rate as defined in a sales tax “item” or sales tax “group”, which combines the sales tax rates of multiple taxing authorities into a single selection. Each sales tax item includes a name, a description, a sales tax rate, and a taxing authority to who sales tax collections will be paid.



Since it is common to have multiple taxing authorities in a single location, QuickBooks allows you to create a sales tax “group”, which includes all taxes to be collected with a single selection.



You can also set the default tax “code” for products and services. The tax “code” indicates whether a product or service is subject to tax.



However, you can change the tax code from the default within the “Create Invoice” or “Create Sales Receipt” form.



In addition, new tax codes can be added to further categorize taxable and non-taxable sales transactions for reporting purposes.



Finally, you can indicate whether a specific customer is tax exempt and set a default sales tax item or group.



Robert Guild is certified QuickBooks ProAdvisor in Austin, TX who conducts CPE courses for CPAs and individual training and group classes to QuickBooks users. His company at www.QBCoach.biz, maintains a sixteen-station QuickBooks lab, providing hands-on training. You can contact him directly at rguild@QBCoach.biz or follow him on twitter at QBPro