Navigating Sales Tax on QuickBooks Desktop
Question: I need to charge my customers 7.5% in sales tax, but 6% is for the state and 1.5% is for my county. How do I handle that in QB Desktop so I can file with the state, but just show the 7.5% to my customer?
Answer: Sales tax is complicated, and each state is unique in their design. Some states are origin-based, meaning that the rate is based on where the seller is located. Others are destination-based, meaning the tax is dictated by the customer’s location. And sales outside of your state would be a whole new blog post.
QuickBooks Desktop (QB Pro, Premier, and Enterprise) allows you to create individual sales tax items to account for the various components of the sales tax you need to charge. In this example, we would create a State Sales Tax Item at 6% and a County Sales Tax Item for 1.5%. QuickBooks Desktop then allows us to create a Sales Tax group consisting of the state and county rates for a total of 7.5%. When you select this group as the sales tax setting for this customer, your customer will see only the 7.5%. When you run the sales tax report as needed, the sales tax will be broken into the two components: State and County, giving you the data you need to file your sales tax.
Please email accounting questions you would like considered for the column to HGatter@AccountingSupportLLC.com with the subject line of "Ask the Accountant."
Harriet Gatter, owner of Accounting Support LLC, was an ad specialty distributor for 23 years and an adjunct professor of accounting at Neumann University. She sold her ad specialty business in 2012, became certified as a QuickBooks ProAdvisor, and now works exclusively with ad specialty distributors nationwide on their QuickBooks, order management and accounting needs.