Avoid Discrepancies in Sales Tax Report in QuickBooks

Sales tax report fetched under QuickBooks is imperative to garner imperative tax details while keeping track of total tax owed by the user. QuickBooks in essence have accorded users with three main ways of calculating the liability under tax owed by them, namely Pay Sales Tax Window, Sales Tax Liability Report and Sales Tax Payable Register.

  • Pay Sales Tax Window: Under this window, user can view how much tax is owed to different tax agencies. User can then pay the total sales tax owed by their business followed by generating report of the Sales Tax Liability.
  • Sales Tax Liability Report: This report is seen as the detailed summary showcasing the total tax collected or billed under each and every sales tax agency.
  • Sales Tax Payable Register: This register keeps a record of all those transactions that has taken place related to the sales tax of the business.

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Sales Tax Liability Report generated accords a total picture of sales tax owed by the business and user for a specific time period. QuickBooks software generates this sales tax liability report on the basis of accrual method. This generation of report and its type can be changed by configuring the report settings as stated below.

In order to display the report follow the steps detailed below:

  1. Select reports tab from the menu and then click on Vendors and Payables option, followed by Sales Tax Liability.
  2. In the new window check up on the period dates set for ‘From’ and ‘To’ fields. In case the user wishes to make any change then select any one of the following options:
  • Provide new details (dates) for both From and To fields.
  • Select any of the previously set in date range from the option.

In order to configure the settings for report’s accounting basis, the instructions are detailed below:

  1. Open QuickBooks, locate Preference option from the menu bar and follow it by clicking on Sales Tax tab.
  2. Under the option of Sales Tax Accrues opt for any of the basis as preferred and in interest of the business:
    • Opt for option ‘As of Invoice Date’ if the report has to be generated on accrual basis.
    • Alternatively choose option ‘Upon Receipt of Payment’ for generating report on cash basis.

User Opts for Group Tax:

Under this the software firstly calculates the taxes under a group, individually and then adds all the calculated tax together to generate one amount of total tax. In case of decimal points, software automatically rounds off the individually calculated tax to their nearest cent. This invariably creates a difference in the amount calculated by Group tax method with that of other method under which user first combines the rates of individual taxes which is then applied to the sales. However, the user does not have to worry about the difference as the software also calculates individual tax rates correctly in reports later.

User Opts for Sales Tax Payable Register:

Once the user generates a sales receipt or invoice through QuickBooks, the software automatically creates a record of the transaction under Sales Tax Payable register. This register helps to keep track of all the tax vendors of QuickBooks and keeps systematic records of all transactions with these tax agencies under one Sales Tax Payable account only.

In order to showcase the Sales Tax Payable register, follow the below illustrated instructions:

  1. From main menu select option ‘Lists’ followed by clicking on Chart of Accounts.
  2. Under new screen locate Sales Tax Payable account and double click on it.
    1. All entries individually represents single transaction of Sales Tax.
    2. The last ending balance displayed is the actual liability for current tax.
    3. All the tax amounts recorded as payments made to tax agencies are showcased in decreasing order while taxes registered under invoices and sales receipts are showcased in increasing order.

Sales Tax is a vast and quite complex in nature. Thus it is generally recommended to resolve any of the errors related to Sales tax under expert supervision of QuickBooks technical support experts setup by Intuit.

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