In another blog post, we used the QuickBooks online (QBO) sample file to setup a new sales tax rate. It was for Mountain View city with a rate of 8.75%. We edited a customer, Amy Lauterbach, as falling in this tax category.
Today, let’s see how QBO uses this sales tax rate to help us collect and pay sales taxes.
Above is an invoice for Amy Lauterbach of Amy’s Bird Sanctuary. We sold and assembled a really nice rock fountain for her. The price of the fountain is $8500. The installation was $2000.
A couple of defaults come up in the invoice. One you can see from the arrow. Since the customer setup specifies Mountain View as the sales tax rate to be charged for this customer, QBO automatically does that without any direction from us, the user.
The red circle notes that the product, rock fountain, is taxable. That came up automatically too. It’s because of the product/service setup.
Above is a screenshot of the setup or edit window for the Rock Fountain product/service. You can see the setting that marks it as taxable by default.
The invoice we created is large enough we should clearly be able to see its inclusion in the Sales Tax Center.
Since there were no other invoices dated in the month of December, ours clearly stands out. We had sales of $10,500 with taxable sales of $8,500. That matches what we recorded on the one invoice we created.
Sales tax amounts are grouped in the Sales Tax Center by tax agency. Note that under the Arizona Dept. of Revenue, there is also $10,500 in sales.
This comes from the same invoice. In other words, for Arizona purposes, we still had $10,500 in sales. Note though that the taxable column shows no amount. Those sales are not taxable for the Arizona Dept. of Revenue.
To the left of the portion of the Sales Tax Center shown (not visible in the graphic), is a link for the sales tax liability report. The information on that report is largely the same as what we see in the Sales Tax Center.
When you are ready to pay sales tax, be sure and use the Record Tax Payment button at the bottom of the window. This is how QBO knows to track your check as a sales tax payment and keep a record of it here in the Sales Tax Center.
Other months of sales actually affect the total amount due if we were really making a sales tax payment. But, just utilizing the one month we used in our test, above is the screenshot of the payment we would make.
Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
7791 NW 46th St. Suite 109
Doral, FL 33166
954-414-1524
hector@garciacpa.com
