Tracking Sales Tax in Quickbooks

• 1). Check the tax code and item under the customer information screen. Open your customer center and choose a customer. Click "Edit Customer" and open the "Additional Info" tab. The sales tax information window is in the lower-left corner. The tax code is to create a default code for each customer. Should you have a customer that is a nonprofit or a reseller, you will need that information in the resale number box. Assign these customers a Non-Taxable code and a Non-Taxable item.
  
  
• 2). Create the correct sales tax items. Go to the list menu and choose the sales tax item list. Press CTRL+N to create a new sales tax item. Using your state's form detailing the breakdown of sales taxes paid, first create the state sales tax, name it and enter the rate. The tax agency you pay will be the department of revenue of your state.
  
  Hit "OK" and create a new sales tax item for the percentage of county taxes. If a local or city tax applies, create one of those as well. This will keep track of the state sales taxes and the discretionary local taxes for your monthly reports.
  
  
• 3). Create a sales tax group. Name this group "Total Sales Tax." If you pay taxes to more than one county, you will have to create a sales tax item for each one. The sales tax group combines all taxes into one percentage and one total while allowing you to keep the details separate for those monthly reports, without having three separate taxes on your customer's receipts.
  
  
• 4). Check your sales tax preferences. From the home page, click "Manage Sales Tax." The company preferences screen will pop up and allow you to set a default sales tax item. Make the group sales tax item you just created the default. The second window will allow you to assign sales tax codes. Should you wish to keep resellers separate from nonprofits, it will allow you to create a new code to assign to each customer.
  
  
• 5). Check the "When do you owe sales tax?" window. If you are on the accrual basis, you pay sales tax as of the time you enter the invoice into Quickbooks. If you are on the cash basis, you pay sales tax when you receive payment for the item or services rendered. Most states are on the accrual basis: They don't care if you've collected or not; if you made the sale, you must pay the tax.
  
  Choose the frequency with which you actually pay the sales taxes: monthly, quarterly or annually. Most businesses should pay at least quarterly, if not monthly. Check for the laws in your state regarding minimum amounts of sales.
  
  
• 6). Generate the sales tax reports. Return to the "Manage Sales Tax" button and click "Sales Tax Liability" and "Sales Tax Revenue Summary." These reports will give you the breakdown of all the information you need to file your state sales tax returns.