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How to Set Up and Use the VAT Feature in QuickBooks Online?

One of the most proficient finance managing software, widely used by countless businesses is QuickBooks. From managing minuscule actions to […]

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One of the most proficient finance managing software, widely used by countless businesses is QuickBooks. From managing minuscule actions to taking care of complex duties, QuickBooks gets done the herculean tasks for your business effortlessly.

What is even more worth mentioning is QuickBooks’ interesting features that look after the critical needs you expect to be taken care of in a business.

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Speaking of which, a dedicated to a special feature in QuickBooks Online, this article is all about setting up and accessing the VAT feature.

Calculating value-added tax or VAT is a very important action that is mandated to be taken. QuickBooks Online can seamlessly automate the VAT calculations present on your respective receipts and invoices. This would allow you for accurate fillings every time.

How to Set Up and Access the VAT Feature in QuickBooks Online?

Let’s start the journey towards unfolding all details about setting up and accessing the VAT feature in QuickBooks Online.

Step 1: Vat Calculation

The first step in setting up the VAT feature in QuickBooks Online is to learn how the software manages to automatically calculate the overall rate of VAT. Note here, that the automatic calculation of the total VAT rate happens based on the following for each of the sales taking place:

  • VAT exempt status of your customer
  • Destination to which you sell and ship
  • VAT category of your respective service/product

Step 2: Collection of Tax Info

The second step is updating on QuickBooks how and from where you are collecting the VAT. Keep in mind that QuickBooks Online has a record of your state’s tax laws so that the calculation of the VAT and returns happen accurately.

In case, you are charging VAT rates that are outside of your respective state, you can consider adding other tax agencies to whom you pay.

For new users on QuickBooks, to do the above mentioned you need to first set up from where you charge VAT.

Setting up sales tax would follow:

  • From the left menu, choose Taxes and tap on Set up tax.
  • Insert a Tax name, agency name, description.
  • Provide a Business ID (this is optional) and choose your applicable Start of current tax period.
  • For GST, choose your tax Filing frequency.
  • Choose your Reporting Method (this would be mostly Accrual; for doubts check with your consultant).
  • Insert the Sales Rate and tap on This tax is applicable on purchases, only if that’s applicable.
  • Hit Next followed by selecting OK.

When you are done with setting up the tax centre, you can proceed with adding custom tax rates too.

Step 3: Adding Tax Categories

The next step includes adding the tax categories for each of your respective products and services. The rules or guidelines related to taxing a product can vary depending on which destinations you sell.

Once you are ready, you can start assigning multiple VAT categories to the things you sell. In this way, QuickBooks would gain the knowledge of exactly what will be the VAT amount needed to be charged based on the products you are selling.

Step 4: Verify Customers Info

Tax rates also vary in situations where you are shipping products or enabling services to your customers’ doorstep. With respect to this, what is critical to understand is that few customers won’t be mandated to pay VAT. Such customers who are not mandated for paying VAT are from sectors like schools, churches or other non-profit organizations.

Thus, you must have the correct tax status, shipping and billing address of your customers.

Step 5: Tracking Vat

When the set-up is complete, it is from here that you can start leveraging the VAT feature. Further, it will be detailed on how it works and from where you can access the same.

Step 6: Verify Owing Amounts

Right after the set-up when you are about to access the VAT feature, you need to invest significant hours in giving a detailed look at the taxes which you owe. Along with this, it is also vital to know why you owe them as well.

When you know how much VAT you owe, it assures you of accuracy before you file and for the return pay your share of VAT.

Step 7: File Vat Return

To ensure that the VAT feature has been set up correctly, you need to start filing your VAT return. Begin e-filing either by sending your respective returns by mail or e-filing on your tax agency’s website.

When you are done with the filing, track your new VAT payment and take control of your records which are all updated in QuickBooks.

Setting up and accessing the VAT feature in QuickBooks Online feels no more cryptic, right? Well, that’s what this article was devoted to and hopes that it has made justice to your requirement.

With QuickBooks Online’s VAT feature making everything so seamless to manage and track under one single platform, you can now blissfully overcome the hassles of extra fees or late returns.

If you still feel the information provided to get the complete download on the VAT feature in QuickBooks Online was not sufficient in this article, you can always get your queries clarified in a jiffy with the experts.

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Is there any Specific Region for Which the Default Set of VAT Codes Applicable are by Default Set up in QuickBooks?

Yes. For South Africa regions, the default set of VAT codes applicable is by default set up in QuickBooks’ respective file.

I need to Double-Check my Customers info in QuickBooks. How can I Proceed?

Since tax rates are also dependable on locations to which you either sell or ship, verifying your customers’ info in QuickBooks is very important.

The following steps are mentioned below to guide you on the same:

Visit Sales and tap on Customers.
Choose the respective Customer for which you intend to update or verify the information for.
Press Edit.

While Editing Customer info, Where would the Changes Reflect?

While you are editing the customer’s info in QuickBooks Online, the changes are to be seen in other areas of your company file. This will also include your previously sent invoices.

If there are any recurring templates, QuickBooks Online would update on the same as well. These recurring templates typically would include previous information such as:

Shipping Address
Billing Address
Preferred Delivery Method
Preferred Payment Method
Terms
Email
Is Taxable

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You can export a Chart of Accounts, Customers, Items, and all the available transactions from QuickBooks Desktop.


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To use the service, you have to open both the software QuickBooks and Dancing Numbers on your system. To import the data, you have to update the Dancing Numbers file and then map the fields and import it.


How can I Delete in Dancing Numbers?

In the Delete process, select the file, lists, or transactions you want to delete, then apply the filters on the file and then click on the Delete option.


How can I import Credit Card charges into QuickBooks Desktop?

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Dancing Numbers is SaaS-based software that is easy to integrate with any QuickBooks account. With the help of this software, you can import, export, as well as erase lists and transactions from the Company files. Also, you can simplify and automate the process using Dancing Numbers which will help in saving time and increasing efficiency and productivity. Just fill in the data in the relevant fields and apply the appropriate features and it’s done.

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Why should do you change the Employee status instead of deleting them on QuickBooks?

If you are unable to see the option to terminate an employee on your list of active employees on the company payroll, this mostly implies that they have some history. Thus, if you change the employee status instead of deleting it on QuickBooks, the profile and pay records remain in your accounting database without any data loss in your tax payments.


Is it possible to use the Direct Connect option to sync bank transactions and other such details between Bank of America and QuickBooks?

Yes, absolutely. You can use the Direct Connect Option by enrolling for the Direct Connect service which will allow you access to the small business online banking option at bankofamerica.com. This feature allows you to share bills, payments, information, and much more.


Why should do you change the Employee status instead of deleting them on QuickBooks?

If you are unable to see the option to terminate an employee on your list of active employees on the company payroll, this mostly implies that they have some history. Thus, if you change the employee status instead of deleting it on QuickBooks, the profile and pay records remain in your accounting database without any data loss in your tax payments.


What are the various kinds of accounts you could access in QuickBooks?

QuickBooks allows you to access almost all types of accounts, including but not limited to savings account, checking account, credit card accounts, and money market accounts.

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