Set up Sales Tax, record, and track sales tax for your products in your QuickBooks Online.
QuickBooks allows users to accumulate and dispatch sales tax on behalf of the governing authority. And to do so, you need to determine sales tax items.
Read More: How to set up sales tax in QuickBooks Desktop?
It is not possible to file taxes directly with the help of QuickBooks, although, it can be used to monitor sales tax collection. Additionally, such financial records are crucial to report income to the IRS.
Note: Do not miss out to register with the taxation department of the state in which you intend to sell.
There are reasons to set up sales tax in QuickBooks online. Here are they follow.
Why setting up Sales Tax in QuickBooks is required?
Setting up of Sales Tax in QuickBooks has a host of benefits, some of which may include:
- Management of sales tax on cash-basis
- Display multiple sales tax items on a particular invoice
- Monitor sales tax while buying from vendors
- Processing adjustment of sales tax
- Paying back of sales tax from customers exempted from tax
The above-mentioned points are convincing enough to set up Sales Tax in QuickBooks online.
Steps to set up sales tax in QuickBooks online
It is imperative to collect taxes for specific goods and services you wish to sell.
With QuickBooks, it is possible to maintain a precise record of these taxes in order to track them easily and dispatch them to the relevant tax collecting organization.
Here are the steps to record sales tax in QuickBooks:
Step 1: In your QuickBooks account, go to the Edit menu and choose the Preferences.
Step 2: On the particular Preference section, select the Sales Tax and then move to the Company Preferences tab.
Step 3: Choose Yes to move to start Sales Tax
Step 4: Choose the sales tax items for every district where you collect the tax from.
Step 5: Add sales tax item
Step 6: Allocate sales tax codes
(With the help of sales tax codes, you can monitor taxable and non-taxable sales transactions. In QuickBooks, there are two tax codes, TAX, and NON. While TAX is used for objects and customers required to collect tax from, NON is specified for objects which are not taxable like non-profit companies or resell objects, etc.)
Note: Ensure that the tax rate that is prepared corresponds with the name and rate of the tax which is being used on the sale process.
Each and every state has certain specific requirements and rates for sales tax reporting. That is why it is imperative to probe the applicable regulations and then set up a QuickBooks account properly.
If this is not followed, your business can face expensive and unavoidable penalties.
The above-mentioned steps are easy to follow if you adhere to them strictly. Still, if you think you need expert guidance or any kind of technical assistance, feel free to connect with us at or LIVE CHAT.
