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Level 2

How do you set up a "proper" Out of Scope tax code in Canada?

Other tips have suggested that for line by line items that get discounted, (and because there is no built in feature for this), that we set up an item(s) for Discounts... but to make the tax code Out of Scope.

 

This seems to work, however I can't find any reference to setting up this specific code... except one that says to make up a "proper out of Scope" code? 

Any help as to the steps and allocations for setting this up would be appreciated. I am currently using app"x" for accounting and am looking at QB as my new solution, and being able to discount line items, even if it's with the above Discount Line Item solution above, might be the deciding factor. 

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Best answer February 10, 2020

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QuickBooks Team

How do you set up a "proper" Out of Scope tax code in Canada?

Hello pondball,

 

It's awesome that you're considering using QuickBooks Online for your bookkeeping needs and I can appreciate making sure it can do what you need before jumping in. I'm happy to go over the sales tax options with you.

 

Luckily, Out of scope is a default sales tax code in the program. This means you won't have to set it up at all. Simply turn on Canadian sales tax codes you need and you'll see the following three already set up for you: zero rated, tax exempt, and out of scope. This is a great article for getting acquainted with QuickBooks Online's sales tax codes: Common sales tax codes

 

Here are the steps for setting up sales tax when you're ready.

  1. Select Taxes from the left menu.
  2. Choose Set up sales tax.
  3. Select a province or territory and click Save.
  4. Fill in the Agency settings and click Next.
  5. Click Got it to complete set up.

Once you've got one set of provincial sales taxes set up, here's how you can add more: How to set up a new sales tax code

 

I want to make sure you have the information you need for your discounts as well. QuickBooks Online has a field that can be configured on sales forms to add an overall discount to the transaction. When you need to add discounts to individual items, using the line item solution that you're mentioning is the way to go. You would simply set up an item in your Products and services area, then add it to the form as a negative line item. If you need a hand with that, just let me know

 

I'm available should you have any more questions. I hope to see you again soon!

View solution in original post

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Highlighted
QuickBooks Team

How do you set up a "proper" Out of Scope tax code in Canada?

Hello pondball,

 

It's awesome that you're considering using QuickBooks Online for your bookkeeping needs and I can appreciate making sure it can do what you need before jumping in. I'm happy to go over the sales tax options with you.

 

Luckily, Out of scope is a default sales tax code in the program. This means you won't have to set it up at all. Simply turn on Canadian sales tax codes you need and you'll see the following three already set up for you: zero rated, tax exempt, and out of scope. This is a great article for getting acquainted with QuickBooks Online's sales tax codes: Common sales tax codes

 

Here are the steps for setting up sales tax when you're ready.

  1. Select Taxes from the left menu.
  2. Choose Set up sales tax.
  3. Select a province or territory and click Save.
  4. Fill in the Agency settings and click Next.
  5. Click Got it to complete set up.

Once you've got one set of provincial sales taxes set up, here's how you can add more: How to set up a new sales tax code

 

I want to make sure you have the information you need for your discounts as well. QuickBooks Online has a field that can be configured on sales forms to add an overall discount to the transaction. When you need to add discounts to individual items, using the line item solution that you're mentioning is the way to go. You would simply set up an item in your Products and services area, then add it to the form as a negative line item. If you need a hand with that, just let me know

 

I'm available should you have any more questions. I hope to see you again soon!

View solution in original post

Highlighted
Level 2

How do you set up a "proper" Out of Scope tax code in Canada?

Hi Laura 

Thanks for your reply. I was using the test file and saw three tax codes in that file, the zero, exempt and then the ontHst tax code...  it not the Out or Scope code. Perhaps that was because it was the online test file? Anyway, as long as I know it’s there that will be good... otherwise I end up taxing a discount and it would throw things out of whack...  not something a non-accountant needs to have happen!

 

I’ve  gone through many of the video tutorials, again to make sure this is the last time (4 times over the course of 30+ years) that I change accounting apps. Hopefully the Canadian version of QB stays in vogue, as I’ve had two others cease and desist on me, thus necessitating the switch. On that note I thought I had come across a series of video tutorials that had been intended to get someone (non accountant) going with QB. .. but haven’t come across it again in the last few days. Do you have a link to that series? Also, will there be a test file with the real QBO once I sign up so that I can experiment on that file instead of my actual business file?

Once again, Thanks for your reply.

 

 

on that note, I thought I saw a

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QuickBooks Team

How do you set up a "proper" Out of Scope tax code in Canada?

I'm glad to hear that you've had a chance to play around in the Test File for QuickBooks Online. I just took a peek at it myself and I see exactly what you're saying about the options in the drop-down of the sales tax column only showing those three taxes you mentioned. If you look at the Amounts are drop-down on a form though (just above the far right column), you'll see out of scope there. However, the option should also be appearing for the individual line items, so there may be a glitch with the test drive at this time. I'll report it to my team.

 

Since the test file isn't working quite as it should, I can appreciate wanting to try in a live account before you get started I recommend using a QuickBooks Online 30-day trial to enter data and try things out to see if it's for you. Once you're ready to start, you have two options: you can start a brand new subscription separate from the trial or you can delete all the data in the trial and start fresh once you subscribe.

 

Things to keep in mind if you're going to use the second option is that any payroll information you enter to test cannot be deleted through this function since payroll is an add-on feature. I'll leave you with this article to learn more about deleting the information: Delete your data and start over in QuickBooks Online

 

Give me a shout if you need anything else!

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Level 2

How do you set up a "proper" Out of Scope tax code in Canada?

Phew!

 

Thanks Laura... That explains it!

 

I just spent another hour testing out the test drive file (on an older Mac with a larger screen)... and still couldn't find the Out of Scope Tax option. I thought maybe I had missed the option on my smaller screen. Apparently not!

 

This OoS option is especially crucial as when I add a Discount line to the invoice I made in Test Drive, it did not allow me to save the invoice until I attributed a tax code... and as there was no option for OoS I was stuck...

 

If you can assure me the OoS is in the live version of QGO I don't think I need to run a trial version before diving in. I'm still playing around with a few other features but so far it looks like a match.

 

Thanks again!

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QuickBooks Team

How do you set up a "proper" Out of Scope tax code in Canada?

It's my pleasure! I'm excited to hear that QuickBooks is lining up as a match. I can absolutely assure you that the out of scope option is a default once sales tax is configured in QuickBooks Online. You're right about it being needed in order for the line-item discount workaround to work properly.

 

Here's a screenshot from a live trial to show you what it should look like.

 

 

I just set up sales tax on that account and didn't have to do anything extra to get it to appear. Just like that, you'll be on your way.

 

I just realized that in my last response, I forgot to link you to our videos and tutorials page! Hopefully this is coming better late than never, but here's our support page that shows you how to find help articles as well as video tutorials: How can we help? This may have been the page you were looking at originally. If not, I can see what else I can track down for you if you give me a few more clues. Let me know!

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Level 2

How do you set up a "proper" Out of Scope tax code in Canada?

Perfect... one more question that has been answered, thanks!

 

I'm going through the Getting Started one as we speak... lots of good tips.

 

With respect to continuing this thread, should I mark it as answered or is it ok to keep this thread going with non-OoS questions?

 

i.e.. I have a question about setting up inventory... (I should have bookmarked the page cuz somehow I can't find it again!), anyway, it goes something like this...

• we have about 40+ different types of product that we both buy and resell

• some items do not have additional options

• some items have three colour options

• some items have both size and colour options

 

I think the sample I originally saw showed something like:

• T-Shirt:Size:Colour

such that the Shirt was the Item, and Size and Colour were sub-categories??

 

So when I enter T-Shirt in the Item column, will it bring up pull-downs for Size and Colour, and how will this affect the inventory. Will QBO keep track of these items as items sold and will I be able to view a report on an itemized list later, for re-order purposes?

Highlighted
QuickBooks Team

How do you set up a "proper" Out of Scope tax code in Canada?

You're diving right into QuickBooks and I love it! This may be the article that you came across. Give it a gander and see if it looks familiar: Set up and track your inventory

 

As for having variances in your products, in this case, it'll probably best serve you to set up the shirt colours as individual items. For example you could have something like this.

 

 

In this case, I've put both the name of the item and the colour in the Name field of the item setup to ensure that the customer is able to see both the item type and colour. It would look something like this.

 

 

While you can use the category option when you're setting up inventory, that's more for internal reference. Here's another shirt that I set up, putting only the colour in the Name field and then using the Category to signify it's a shirt. On the invoice you see, it looks fine because you can see both details.

 

 

Now let's take a look at what your customer would see.

 

 

That might not make a whole lot of sense to them, right? It's up to you how you'd like to configure it, but it sounds to me like you're looking for the first option, not the second. In both instances, the items will still appear in the drop-down menu on the line, but how they appear to the customer makes a difference.

 

As for reports, QuickBooks Online does have reports for your inventory, such as the Inventory Valuation report and the Physical Inventory Worksheet report. This article explains: Use reports to see your sales and inventory status

 

For your reference as well, inventory in QuickBooks Online works with FIFO tracking, which you can read more about here: What is FIFO and how is it used for inventory cost accounting?

 

Whether we keep working in community and on this thread is your call. It might help to have different threads for different questions. It may even be easier for you to take advantage of the QuickBooks Online support teams outside of community so you can really get in depth with your questions and how you'd like to set things up. There's no charge and the options are phone, chat, and social media messaging. My team and I, the QuickBooks Team here in community, are a part of the social media team as well if you'd like to reach out to me or connect with one of them.

 

Phone and chat: Click Contact Us to learn how to reach phone and chat support.

Schedule a Callback: click (?)Help in the upper right > click Contact Us > explain your situation > click Let's Talk > choose Get a callback (Note: Callback hours are the same as regular phone hours.)

Social MediaFacebook and Twitter from Monday to Friday between 9 a.m. and 8 p.m. ET

 

Go with whichever option works best for you! The one thing to keep in mind about community is it's a public forum that's not necessarily designed for in-depth troubleshooting, so there may be times we would direct you to the other support options anyway. All the same, we're here to help you get on track. :)

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Level 2

How do you set up a "proper" Out of Scope tax code in Canada?

Hi again... just got setup up with QBO Plus... thanks for your assistance with the initial set of questions. I tried to use the online conversation but it felt like I was being replied to by a robot... (literally)... and couldn't find where I could start a new thread... so I apologize for continuing in this one... only choice at this point.

 

I have now downloaded over 400 videos from various sources and already feel that I am ahead of where I have been for over a decade! There are however a few things I have not been able to find, either in video or in your Help files, to help me with my specific, initial setup.

 

  • I am going to be using the bank connection to our business account. I feel comfortable with setting that up and will be starting with Jan 1st, our startup date each year. 
    • Is this correct?

 

  • I don’t know whether to also include downloads from our credit card though (joint business and personal). To date I have been using just the one card for all transactions as not all business charges can be charged out at 100%… i.e…. we are a home based business who can claim 36% of an expense (ie. simple repairs or supplies), so with those I do the calculations in a spreadsheet and pay that portion through the business account with the remainder paid through the personal account. 
    • Should I continue doing it this way and not auto feed the credit card data to QBO?

 

  • I am still trying to find a clear method of entering Accounts Receivables from MWG year end to QBO for startup. I have 3 such A/Rs to enter. I have found various suggestions ranging from entering the AR amount in the customers “Balance” when I set up the customer, to, entering a new invoice for that customer… however… that amount will already have been claimed as revenue last year and I don’t want to have it considered a revenue again this year. Of the three A/R items, one is a full invoice amount, one is a partial payment owing, and one will be a Contra against purchases from a client who is both a customer and a vendor with us.
    • What is the best method for entering Opening Balances? I have found several Help files here at QB Canada but none seem to show exactly how to best enter the outstanding A/R amounts. Can I just enter the amounts in the Starting Balance in the Customer setup? What do I do with the Contra A/R?

 

I appreciate any assistance/links you can provide to help me get my initial setup done correctly.




Highlighted
QuickBooks Team

How do you set up a "proper" Out of Scope tax code in Canada?

Hello again pondball!

 

It's great to hear from you and I'm impressed by the amount of research you've already done for the features in QuickBooks Online. It sounds like you're well on your way to being a pro and I'm sure you'll have it mastered in no time! Great work. :)

 

Now, let's take a look at what you've mentioned today. I'll start with your questions and then clarify how to post a new question in community, as well touch on your comments about chat support.

 

Your first two questions both centre around the Banking tab feature where you can connect your bank and credit card accounts to filter transactions into QuickBooks Online for easy overall sorting. It's a time-saver for many business owners. Which accounts you connect is entirely up to you.

 

What transactions enter into your account depends on a few things: what time-frame you choose from the connection process, what your bank has available for download, and what you upload manually to supplement if necessary. Most banks will allow you to download the last 90 days of transactions, but some banks have broader or more limited time frames. You've probably come across this article already in your research, but the Connect bank and credit card accounts to QuickBooks Online article outlines more of the process, including choosing the date range as I've mentioned.

 

The manual upload process I highlighted is useful for if your bank doesn't quite give you the data you need. For instance, say you did want more than 90 days of data, but the initial setup doesn't give you that option. Following the steps in the Manually upload transactions into QuickBooks Online article, you'll be able to get a file from your bank to download into QuickBooks.

 

For accounts or cards used for both personal and business expenses, there are certain things to consider and it's best to check with an accountant or bookkeeper to make sure you've got the right option for you. If you were to connect the card to the feed, you could consider excluding the personal transactions from the bank feed during the matching and categorizing process. Based on what you're doing with the spreadsheet, this may work for you.

 

However, depending on the situation, it may be that you should be recording these kinds of transactions, which is where an accountant or bookkeeper would come in. While QuickBooks community has an article about mixing business and personal funds, it's up to you to decide if and how to record them.

 

An accountant or bookkeeper that's familiar with QuickBooks would also be ideal for determining the best way to record your expenses for which you can claim a certain percentage. If you have an accountant already, you can use the My Accountant tab in QuickBooks to invite them as a user. That same tab also has a handy Find a pro to help button that shows you with QuickBooks-certified accountants near you.

 

As for entering the opening balances, you're right, there are a few different ways to do it. Which you choose will depend on how you want it recorded. The Test File for QuickBooks Online I linked in my original response to you might be useful for seeing how each of these works.

 

Using the opening balance field on the customer setup will enter the amount as a single invoice for the customer. The as of date field lets you choose the appropriate date, and then that becomes the invoice creation date.

 

Since you have specifics for the transactions that are owed, it may be worth entering them as invoices and partial payments if you'd like to see a clearer picture of what you're dealing with. In these instances, just keep in mind to make sure the dates are correct on the transactions, especially if you're going to be recording the partial payment.

 

Another important detail is to note that QuickBooks handles customers and vendors separately. Therefore, it'll take a bit of finessing to record any sort of transactions that might be overlapping between the customer and vendor profiles of the individual. Again, I recommend checking in with an accountant, and you can also check out the two community posts below where accountant users have chimed in on these kinds of questions before. One of the following is for QuickBooks Desktop, but the principles of the options should be the same.

I think that about covers your questions, but let me know if I've missed anything or if you need clarification, I know I've given you a lot.

 

Feel free to reply on this thread this time around. So you have it for next time, here's how you would start a new thread in the community platform.

  1. On Canada's QuickBooks Community page, go to QuickBooks Q&A.
  2. Select from one of the topic tiles on the next page.
  3. Click the Start a discussion button.
  4. Type your question and give some details.
  5. Choose the product you need help with.
  6. Select Post.

Finally, the support options. I can appreciate how chatting with an agent that feels robotic wouldn't be useful for situations such as this. I want to assure you that our chat agents are real people, trained and dedicated to helping you. I'll share your feedback about what you've experienced with my team to make sure we're meeting our customer service standards.

 

I hope that helps!

Highlighted
Level 2

How do you set up a "proper" Out of Scope tax code in Canada?

Once again Laura... you're the best!

Thanks for the great, and very quick reply. Much appreciated. I'll see how far I can get with the links and then reach out for any further advice.

Cheers

Dan

 

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QuickBooks Team

How do you set up a "proper" Out of Scope tax code in Canada?

Hey Dan,

 

I'm happy to help, and I'm sure you'll do great! Let me know how it goes. :)