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Set up Automated Sales Tax for Cash accounting method

How can I switch to Automated Sales Tax if my business's accounting method is set to cash?  We ship all over the US now, so I need sales tax to be automatically calculated.  I saw that you can set up a new company, and turn on the automated sales tax method before changing to the cash accounting method, but how do I do that?  Will I lose all my current settings and templates?  Is this the only way to turn it on?  I am currently using Quickbooks Online Plus.

Established Community Backer ***

Re: Set up Automated Sales Tax for Cash accounting method

you can not, auto sales tax in QBO only reports on accrual, same is true for avalara a third party sales tax solution

your company being on cash basis for taxes has nothing to do with it, you need to check with the state, the state determines whether sales tax is reported and paid on accrual or cash basis.  most, but not all, states are in fact on accrual basis for sales tax.

Super Explorer ***

Re: Set up Automated Sales Tax for Cash accounting method

Do you know if Intuit is in the works to make the Sales Tax Center work for cash basis also? I know they say a work-around is to pull the report and it will show you how much you owe in the cash basis. But that doesn't solve the outstanding payments in the Sales Tax Center. Also all the report such as Profit & Loss pulls the info from the Sales Tax Center.

QuickBooks Team

Re: Set up Automated Sales Tax for Cash accounting method

Hi there, Vitan.


I’m happy you turned to the Community about the Sales Tax feature’s accounting method. Let me share some insights about this.


Since you’re using the Cash basis method, you’ll still be able to use the Automated Sales Tax feature to track the businesses’ sales taxes. To do this, make sure to set the company’s accounting method to Accrual first before activating the feature.


Here’s how:

 

  1. Go to the Gear icon at the top, then choose Account and Settings.
  2. Click on the Advanced tab on the left panel.
  3. Click on the Pencil icon for Accounting.
  4. Choose Accrual on the Accounting Method drop-down.
  5. Click Save and Done.


Next, you can start activating the Automated Sales Tax. Here’s an article with detailed instructions and a video tutorial about the process: Set up process.


Please go directly to the Set up automated sales tax section. Once done, change the accounting method to Cash.


In regard to outstanding payments, review them first and check the transactions associated with it. If in case you’ll have to create an adjustment, check out the steps below:

 

  1. On the Sales Tax page, choose the Start Return button next to the tax you’re working on.
  2. On the Return summary screen, click on the Add an adjustment link and choose the appropriate reason.
  3. Click on the drop-down for Account and select where you want to post the transaction.
  4. Enter the amount.
  5. Click on Add.

We strive to deliver products that are well-suited to our customers' needs. Hearing your suggestions and ideas can even help our Product Development Team achieve this goal.


I encourage you let them know adding the Cash basis to automatically track sales tax is important for your business. Customers suggestions help them identify the features and options that you’d like implemented in future product updates.

 

To send feedback, go to the Gear icon at the top and select Feedback.

 

The information I provided should point you in the right direction.

 

Be sure to let me know if you have additional questions about QBO. I'll be around to answer them. Have a good one.

 

Super Explorer ***

Re: Set up Automated Sales Tax for Cash accounting method

Will there ever be a way to track payments through the Sales Tax Center in the cash basis?

 

Thank  you for your reply. I am currently still using the Sales Tax Center even though my accounting method is cash basis. I was wondering if there was a way to combine the  Sales Tax Center maybe through the chart of accounts?

 

"Revenue Payable/Other Current Liabilities/Sales Tax Payable" (Connected to the Sales Tax Center)
and
"Sales Tax/Expenses /Taxes Paid” (Sales Tax Payments Made)

I tried to change one of the transactions and got a warning
“Something's not quite right. You have either selected a tax liability account on a transaction where it's not allowed, or haven't specified a tax rate along with it.”

And tried to change name of account: “Something’s not quite right. You can't change or delete this account because it's used to track sales tax amounts.”

Tried merging: “not quite right Another account of a different detail type is already using this name. Please use a different name. You can merge accounts only when both their 'Type' and 'Detail Type' match.”

QuickBooks Team

Re: Set up Automated Sales Tax for Cash accounting method

Hello, Vitan.

 

There isn’t a way to combine sales tax center to your chart of accounts. The moment you turn on sales tax, QuickBooks will automatically create defaults accounts that are associated. Sales tax items do not have an optional mapping, they all default to sales tax payable. As a workaround, there has to be an item in products & services that map to that account.


Please don’t hesitate to reach us again if there’s anything else you need.

 

 

 

.

Super Explorer ***

Re: Set up Automated Sales Tax for Cash accounting method

What do you mean "As a workaround, there has to be an item in products & services that map to that account."

QuickBooks Team

Re: Set up Automated Sales Tax for Cash accounting method

Hello there, Vitan.

 

It means you'll have to create a sales tax item, then use your desired account.

 

Here's how:

  1. Click the Gear icon.
  2. Choose Products and Services.
  3. Click New, then choose Service.
  4. Enter a desired name.
  5. Click the Income account drop-down arrow, then choose the desired account.
  6. Click Save and close.

We're just here if you need more help. Have a good one!