Sales Tax In QuickBooks

Sales Tax In QuickBooks

Following these instructions is important for filing sales tax correctly in QuickBooks. Incorrectly filed sales tax may result in overpaid or underpaid tax liabilities, as well as a number of errors on QuickBooks reports.

Sales Tax Liability Report

  1. Load your QuickBooks program.
  2. Verify that your Accounts receivable is correct by reviewing an Open Invoices report.
  3. Verify that the bank account is reconciled up-to-date.
  4. From the Vendors menu, select Sales Tax > Sales Tax Liability.
    1. Verify that the correct date range is selected (defaults can be changed in preferences).
  1. Verify that the total for Tax Collected and Sales Tax Payable are equal. (STOP!! If these do not match then a sales tax adjustment is needed. Contact CleanBooks for assistance!) 
  2. If the Tax Collected and the Tax Payable do not match, then an invoice was deleted or edited in a previous period.
    1. Create a new invoice, dated the previous period, so the tax discrepancy matches the tax in the invoice.
    2. Create a credit memo, dated the filing period, to clear out the open invoice
  1. If Tax Collected in QuickBooks is less than the rate times the taxable sales, then there is a discrepancy in the sales tax. Make a sales tax adjustment to increase the sales tax payable to match the tax rate. For large adjustments, do not use this method, but instead correct the root issue in QuickBooks.
    1. If the client uses POS, use the amount that was collected. Adjust Etides as needed.
  1. If Tax Collected in QuickBooks is more than the rate times the taxable sales, then add this to the amount to remit to the state. Since you collected this, you are required to remit it.

Record Sales Tax Discount (if applicable)

Some states offer a discount for sales tax that is paid on time. Follow these instructions to record a sales tax discount. If you are not entitled to a discount, then skip to the next section. 

Important! Do NOT use these instructions to adjust a sales tax discrepancy. Sales forms such as invoices or credit memos must be used to accurately populate the reports. Contact CleanBooks, LLC for assistance.

  1. From the Vendors menu, select Sales Tax > Adjust Sales Tax Due.
  2. Select the correct adjustment date: Last day of tax period.
  3. Select appropriate class (if applicable).
  4. Select Sales Tax Vendor: PA Sales Tax.
  5. Select Adjustment Account: 499 ยท Vendor Discounts.
  6. Select Reduce Sales Tax By.
  7. Enter amount of sales tax discount.
  8. Change Memo to read: Sales Tax Discount.
  9. Click OK to complete.

Record Sales Tax Payment

  1. Print Sales Tax Liability Report from section one (shows discount).
  2. Log onto Etides or call toll free 1-800-748-8299 to pay your sales tax due.
    1. Using Etides (contact CleanBooks for help setting up an Etides account).
      1. Log onto
      2. Click Enter Etides.
      3. Enter user-name and password and click Log-in.
      4. From the Tax Function menu on the left, select File Return/Payment.
      5. Select Sales & Use Tax from the drop-down menu and click Next.
      6. Select your company and click Continue (contact CleanBooks for help adding your company).
      7. Select Sales Return & Payment and make sure the correct period is selected.
      8. Click Continue.
      9. Follow the prompts to enter and pay your sales tax electronically.
  1. Using Telephone
    1. Locate your Tax ID number and Tax ID number.
    2. Locate your bank account and routing number.
    3. Call 1-800-748-8299.
    4. Follow the prompts to report sales using the Sales Tax Liability report.
  1. Record the payment in QuickBooks.
    1. From the Vendors menu, select Sales Tax > Pay Sales Tax.
    2. Verify that the correct bank account is selected.
    3. Select the correct check date (usually the 20th).
    4. Verify that the correct Show sales tax due through date is selected (last day of last tax period).
    5. Type Debit in the Starting Check No. field.
    6. Click Pay All Tax.
    7. Verify that the totals match what was reported (Important).
    8. Click OK to complete the sales tax payment process.

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