QuickBooks Online makes it easy to set up sales tax codes. You can set up your non-profit tax codes similarly to how you'd set up for-profit businesses. For the specifics on how you'd go about recording the taxes, I recommend reaching out to an accounting professional for more clarification. Otherwise, I'll be glad to show you how to set up a sales tax code in QuickBooks:
For more information on sales tax codes, I recommend checking out this helpful article. The article will give you more details on how to set up taxes in QBO. Let me know if you have questions. I'll be on standby in case you need anything.
I do the books for a non-profit (charity) organization. As we do not own any real property to speak of, the GST Return is fairly uncomplicated. The CRA instructed us to follow this procedure:
Remit 60% of all GST collected. - The GST Return in QB displays all GST collected for the period. Calculate 40% and use the Adjustment tab to reduce line 103 by this amount. Line 103 will now display the amount to be remitted to the CRA.
Claim ITC ONLY on real property and Capital Purchases. For the most part, we do not own the building we operate from (or any other real estate and purchase very little in the way of capital assets, so we do not track separately. First, we calculate 50% of the ITC reported on line 106 and record it on line 111 (Rebate) using the Adjustment tab. Then, reduce Line 106 (ITC) to zero (0) using the Adjustment Tab.
The balance remaining is how much GST you owe.
Complete GST 66 Rebate Form (not in QB - CRA only) and claim the amount reported on line 111 of the GST Return.
File both forms online at the same time. If you owed on the GST Return, but the amount of the Rebate is more than the amount you owed, the CRA will refund the difference. If the Rebate does not cover the amount owed, make a payment by the due date.
Some non-profits do claim ITC's on real property. You can create a new GST Tax Code - naming it something that identifies it as refundable (GR) and applying the code to the appropriate expenses. The tax will still be included on line 106 of the GST Return, but you will be able to run a report to isolate the refundable portion of the GST paid.
In this case, when you complete the GST Return, you would NOT reduce line 106 to zero. Instead, deduct the refundable portion (GR Tax Code) from the total ITC, calculate 50% of the Balance and enter on line 111 (Rebate). Then, reduce Line 106 to the amount reported in the GR Tax Code.
I use QBO for a non-profit organization that puts on a music festival (not yet a charity but they are applying). I didn't realize that not all GST paid on purchases is considered an ITC. This has presented me with a couple of issues that I don't know how to handle. If I understand correctly, the only GST I can claim back is for tangible items we purchase to resell (for example T-shirts) but not any other expenses (eg consultants, expenses related putting the festival on like artists, security, printing, advertising, washroom rentals, etc)
a) Am I understanding that correctly?
a) I have entered expenses with the GST tax code as of the date we registered for GST (which was after our festival last year). Can I change the GST coding to non-recoverable so all previous entries are correct and will show up on Profit and Loss statements etc since they are part of the expense now? Do I have to go edit the ones already entered to trigger the change?
2) I assume I also need a GST recoverable tax code as well for the few items that may be recoverable. I'm not of the easiest way to handle the expenses already entered yet be ready for some ITC's or if they get charity status.
3) Can I enter the entire invoice amount and use 'exempt' or 'out of scope' tax code and not enter GST separately at all?
Looking for any suggestions to help me understand how to fix it for historical data and how to best handle it going forward.
I'd be happy to chime in and offer some clarification for you in regards to your GST questions. I know how important it is to ensure you're recording sales tax entries correctly, and I'll point you in the right direction for help with this.
I'll go through each of your questions in order to try and keep things as simple as possible.
1. a) If you're not sure what types of transactions you're able to claim GST on, this is something you'll have to run by your accountant. While I can help answer your product-related questions, I'm not a trained accountant or equipped to help with your accounting questions. If you're not yet connected to an accountant, you can find one in your area here: Find a ProAdvisor.
b) For any changes to GST on your transactions, you'll have to manually go through each transaction to edit it directly. There's no group action that will alter historical transactions automatically.
2. This question is also in the accounting arena, and would be best answered by an accountant.
3. Zero value tax codes, such as Exempt, Out-of-scope, and Zero Rated can absolutely be added to your transactions. These three codes will report differently in your books, so I'd recommend reviewing this article to clarify how they work: Common sales tax codes. This is also something you can consult with your accountant on if you're unsure which one to select.
I hope this helps offer some direction for you moving forward. I'd also like to note that while QuickBooks Online is designed to accommodate tons of different businesses, it's not quite designed for non-profit organizations. The bookkeeping for a charity involves a few unique aspects, which QBO isn't always able to accommodate directly.
If you have any other product-related questions, please don't hesitate to reach out to our tech support team. Our agents will be able to assist and get you back on track in no time.
Have a great day.