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Intuit

Set up and use Automated Sales Tax

IMPORTANT:

Companies set up to use the CASH basis method of accounting in QBO will NOT be able to activate their own migration to the Automated Sales Tax (AST) feature.

Currently, the ONLY way to migrate a CASH basis company to AST is to set the company's accounting method to ACCRUAL, activate the AST feature, and then retroactively go back and set the company's accounting method to CASH.

How does this affect the Sales Tax Center, reporting, and more?

  • If you set your accounting method to Cash AFTER setting up the Sales Tax Center, QuickBooks will still automatically calculate your sales tax but your Sales Tax Center will still display based on accrual method. As a workaround, you can use Sales Tax Liability reports to determine the proper Sales Tax payments recorded in QuickBooks Online.
  • If you set your accounting method to Cash BEFORE setting up your Sales Tax Center, you will be defaulted to manual sales tax and unable to activate the AST feature. In this case, you may want to start a new QBO account/company file then set up the Sales Tax Center prior to setting your accounting method.

Sales tax is getting easier! Through the New Automated Sales Tax experience, you just need to answer a few simple questions and QuickBooks Online will know what taxes apply to your business, set them up, and automatically track your sales taxes.

This means you no longer need to select a tax rate when you create an invoice or other transaction. As long as your Sales Tax Center and all applicable tax agencies are set up, the system will automatically do it for you!

You can also watch this video on how to set up your sales tax real quick:

So... how exactly does Auto Sales Tax work? Here's a quick guide to this feature.

Need additional help? Check available resources on Migrating to Auto Sales Tax and Navigating the Sales Tax Center.

You can also watch our quick video on Collecting and Recording Sales tax.