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How to Set up Sales Tax in QuickBooks Desktop?

Known and eminently recognized for managing major financial requisites of your business, QuickBooks is great software to consider for taking […]

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Known and eminently recognized for managing major financial requisites of your business, QuickBooks is great software to consider for taking care of the sales tax too.

In business, as you would already be very well aware of that you need to collect taxes for the respective goods and services you offer to sell. The principle role of QuickBooks here is to maintain an accurate record or registry of these taxes so that you are in complete control of it. Know how to set up sales tax in QuickBooks Desktop.

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Most importantly, with QuickBooks assisting you to keep a regulated tab on the sales taxes, it also contributes to remitting them to the respective tax collecting firm or agency when needed.

How to Set up Sales Tax in QuickBooks Desktop?

This article will help you in setting up sales tax in QuickBooks Desktop and gives you the leverage to stay one step ahead in every field of your business.

Turn on and Set up Sales Tax Items or Tax Groups

The foremost action for setting up sales tax in QuickBooks is to enable this particular feature and set it up according to tax items/groups.

Step 1: Visit the Edit menu and choose Preferences.

Step 2: Under the Preferences window, find Sales Tax and select it.

Step 3: Navigate to the Company Preferences tab.

Step 4: To enable Sales Taxes, tap on Yes.

Step 5: Based on county, city, district etc, you need to set up according to sales tax items/sales tax groups. Here is where you would be collecting the sales tax.

Step 6: To start adding Sales Tax, click on Add Sales Tax.

Step 7: Based on Accrual/Cash, set up the Sales Tax. While doing so, consider the company’s accounting preference.

Step 8: You can choose to pay the sales tax by setting up your preference as monthly, quarterly or annually.

Step 9: Hit OK.

Now there are two critical aspects to setting up sales tax with respect to QuickBooks. One is the creation of new sales tax items and the other one is editing an existing sales tax item.

Let’s get to the steps of understanding each one of the above-mentioned.

Steps to Create New Sales Tax Items

Step 1: Select Sales Tax Item after navigating to the Type dropdown.

Step 2: Give a preferred name for the respective tax item by entering the same on the Sales Tax Name field. Advised by experts, you can ideally use the location of tax as the name for it.

To proceed further with the information, enter them on the Description Field.

Step 3: Insert a definite rate for the item on the Tax Rate (%) field.

Step 4: Set up your respective tax-collecting agency as a Vendor and enter its name of it on the Tax Agency field.

If you do not find the agency, it means that the agency is not on the list. For adding your Tax Collecting Agency, choose Add New.

Step 5: Hit OK.

Steps To Edit an Existing Sales Tax Item:

Step 1: Scroll to Lists Menu and choose Item List.

Step 2: Locate the respective sales tax item which you wish to update.

Step 3: Make a right-click on the respective sales tax item and choose Edit Item.

Step 4: You can now edit and update information such as sales tax rate, name or the agency as well.

Step 5: Once you are done with the editing, hit OK.

The next thing to understand here is that at times, you would need to set up sales tax in QuickBooks for multiple sales taxes. These various sales tax items are generally displayed on the same sales transaction.

However, even if you set up multiple sales tax items, you can still track and report individual sales taxes.

Steps to Set up for Multiple Sales Tax Items in QuickBooks

Here is how you can set up for multiple sales tax items in QuickBooks:

Step 1: Select Sales Tax Group after navigating to the Type dropdown.

Step 2: Locate the Group Name/Number field and fill in with the preferred name you wish to have for the sales tax item group.

To proceed further with the information, enter them on the Description Field.

Step 3: Start inserting each sales tax that you are planning to include as part of the group. If you notice that the tax item has not been set up yet, you can choose Add New to start.

Step 4: Press OK once you are done.

Looks like, setting up sales tax in either QuickBooks Desktop is pretty easy right? Hopefully, that is what you feel right now!

Just make sure you follow the chronological order of the steps while adding sales tax items and there should not have been any further trouble.

If you still feel that this article wasn’t sufficient in terms of your knowledge needs, you can reach the experts directly beyond this.

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Do I need to Check on the Present Tax Rates and Requirements with my tax-collecting Agency before I Proceed to Set up Sales Tax in QuickBooks?

Yes. Advisably before you start mapping your steps on setting up sales tax in QuickBooks, you must check on the present tax rates and requirements with your respective tax collecting agency.

How can I Set up the Non-taxable Status of an Item on QuickBooks?

To set up the non-taxable status of an item on QuickBooks, you need to look into the steps mentioned below for your guidance:

Scroll to Lists Menu and choose Item List.
Choose Item followed by New/Edit Item under the Item List Window.
Find the tax code dropdown and select Non-Taxable Sales/Non-Taxable Labor.

Is it Possible for me to help a Customer with Setting up the Non-taxable Status?

Yes, you can contribute to helping a customer with setting up the non-taxable status in QuickBooks. Scroll down to get started:

Choose Customer Center from the Customers menu.
Hit right-click on the name of the customer and set it up as non-exempt.
Choose Edit Customer:job.
Navigate to the Edit Customer window and visit the Sales Tax Settings tab.
Under the Tax Code dropdown, select Non-Taxable Sales/Non-Taxable Service.
Insert the customer’s respective resale certification no. on the Resale No. Field.
Press OK once you are done.

Can I Create a Specific Tax Code as per my Business Requirements?

Yes, you can create a specific tax code as per your business requirements. To do this,

Choose Tax Code dropdown
Select Add New

Here are the other non-taxable Sales tax codes that one can use:

OOS- Out Of State Sales Tax that is assigned to a client who has purchased anything from you but stays in a different state.
NPO- Non-Profit Organizations who are not charged sales tax even if they purchase a taxable product
GOV- Sales to a government office that is not taxable
LBR- Labor. In some states, Labors are not taxable.
RSL- Resellers who are selling their products again they purchased from you
WHL- Wholesalers are customers are selling the goods again that are purchased from you

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