{"id":2825,"date":"2016-02-08T09:00:50","date_gmt":"2016-02-08T17:00:50","guid":{"rendered":"http:\/\/evergreensmallbusiness.com\/?p=2825"},"modified":"2019-07-01T15:37:08","modified_gmt":"2019-07-01T22:37:08","slug":"how-to-record-sales-tax-in-quickbooks","status":"publish","type":"post","link":"https:\/\/evergreensmallbusiness.com\/how-to-record-sales-tax-in-quickbooks\/","title":{"rendered":"How to Record Sales Tax in QuickBooks"},"content":{"rendered":"

\"tax<\/a><\/p>\n

If you\u2019re running a small business that sells items subject to sales tax, you want to do good accounting for sales tax. You need to show the right sales tax amount on customer or client invoices, of course. You should make sure you remit the right amount to the state government. And you need to be confident that you can defend yourself in a sales tax audit.<\/p>\n

Fortunately, QuickBooks makes calculating sales tax pretty easy if you take some time in the beginning to set things up right. Specifically, you need take three steps:<\/p>\n

Step 1: Set up sales tax items in QuickBooks<\/h2>\n

Step-by-step instructions for creating a sales tax item are here<\/a>. (The page says it provides instructions for QuickBooks 2012, but the instructions really work for any recent version of QuickBooks). Intuit also has its own instructions here<\/a>.<\/p>\n

Because we operate in Washington State, let me provide two tips specific to Washington State.<\/p>\n

First, for a business in Washington State, you\u2019ll probably want to set up a different sales tax item for each municipality where you do business. (As of this writing, Washington State sales tax is 6.5%. Local governments can levy additional sales tax of up to 3%.)<\/p>\n

To illustrate this with an example, let\u2019s say that you sell your products in Seattle, which currently levies a local sales tax rate of 3%, and in Snoqualmie, which currently levies a local sales tax rate of 2.1%. In this case, you probably want to have two sales tax items, one for Seattle with a rate of 9.5%, and one for Snoqualmie with a rate of 8.6%.<\/p>\n

Note:<\/strong> the tax agency\/vendor for both of these items will be the Washington Department of Revenue, since in Washington State the DOR collects all of the sales tax and then distributes it to the local governments.<\/p>\n

Second, the Washington State Department of Revenue\u2019s website has a number of helpful resources you can turn to when setting up and using sales tax items in QuickBooks. It has a tool to help you look up which tax rate applies at a particular address here<\/a>. It lists the current rates for all local sales taxes here<\/a>, as well as location codes for different sales tax jurisdictions. The Department of Revenue website also answers a number of frequently asked questions about how our state sales tax works here<\/a> and here<\/a>.<\/p>\n

Step 2: Create the invoice or sales receipt for the sale<\/h2>\n

You create a sales-tax laden invoice or sales receipt in the usual way when you work with QuickBooks. But you need to be careful about one additional bit of information when you\u2019re entering the transaction. When you create the invoice or sales receipt, you\u2019ll choose which tax rate item to apply from a drop down menu in the bottom right corner of the screen. The correct rate depends on local tax laws.<\/p>\n

In Washington State we have \u201cdestination-based sales tax<\/a>\u201d since 2008. This means that if you ship or deliver something to a customer, the sales tax rate depends on the shipping or delivery address.<\/p>\n

If you\u2019re a Washington State business and a buyer purchases your merchandise and walks away with it<\/em> in your store, then the correct sales tax rate depends on your store address.<\/p>\n

If you need help with figuring out whether you should enter a sale you make as an invoice or as a sales receipt, see our article explaining the difference here<\/a>.<\/p>\n

Step 3: Record the remittance in QuickBooks when you file your state sales tax return<\/h2>\n

Intuit\u2019s step-by-step instructions for recording a sales tax remittance are here<\/a>. And the process isn\u2019t too terribly difficult. Basically, you choose the Vendors \u2192 Sales Tax \u2192 Pay Sales Tax command and select the sales tax agency you want to remit taxes to.<\/p>\n

If your business owes sales tax in Washington State, you can file your returns and actually pay the sales taxes you owe online here<\/a>.<\/p>\n

Note:<\/strong> the Washington State DOR has some additional useful information about when you have to file, and how often, here<\/a>.<\/p>\n

And a final important note: It\u2019s really important to use the QuickBooks approach to record the remittance. If you or your bookkeeper is just using the Write Checks window or the Register window to record a payment to the\u00a0 sales tax agency, you create a couple of errors in your books: You double-count \u00a0sales tax expense, and you never show yourself paying off your sales tax liability.<\/p>\n

\n

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Which is all a financial tragedy. Getting smarter about tax deductions can save business owners a bundle.<\/p>\n

If you\u2019re thinking after reading this that maybe you can do a better job with your tax deductions, consider our $40 ebook\u00a0Small Businesses Tax Deduction Secrets<\/em>.<\/p>\n

This 70-page ebook\u00a0provides detailed instructions\u00a0about how you can\u00a0annually save thousands of dollars in income and related taxes simply by more effectively using legitimate small-business tax deductions. Interested in more detailed information? Click here.<\/a><\/p>\n

Tip:<\/strong> If you are a client of our CPA firm, don\u2019t purchase this ebook\u2014or any of our other ebooks. Just email us and ask for your complimentary copy.<\/p>\n

Immediately\u00a0Downloadable & Money-Back Guarantee<\/h2>\n

The book is instantly downloadable. You get the ebook when you purchase it.<\/p>\n

Also, we provide a money-back guarantee. If you don\u2019t find the information you need or want, no problem. Just email us<\/a> and request your refund.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you\u2019re running a small business that sells items subject to sales tax, you want to do good accounting for sales tax. You need to show the right sales tax amount on customer or client invoices, of course. You should make sure you remit the right amount to the state government. And you need to […]<\/p>\n","protected":false},"author":3,"featured_media":2696,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[8,6],"tags":[],"class_list":{"0":"post-2825","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-bookkeeping","8":"category-business-taxes","9":"entry"},"yoast_head":"\nHow to Record Sales Tax in QuickBooks - Evergreen Small Business<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/evergreensmallbusiness.com\/how-to-record-sales-tax-in-quickbooks\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Record Sales Tax in QuickBooks\" \/>\n<meta property=\"og:description\" content=\"If you\u2019re running a small business that sells items subject to sales tax, you want to do good accounting for sales tax. 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