Hi there evergreenbooks-c,
Making sure your taxes are set up correctly in your books is vital so that your tax reports will be accurate. QuickBooks Online is a great tool that uses the tax centre located in the Taxes tab to be able to take the amounts of tax calculated on transactions and map them to the correct line of your return. I can provide some information on how the sales tax accounts work in QuickBooks Online.
In QuickBooks Online, there are two types of accounts used, the Tax payable account as well as the Tax suspense account. The tax that is paid on purchases as well as collected on sales is all stored in the Tax Payable account and is mapped to your return based on the tax codes used on each line of the transaction. Once you mark your sales tax return as filed in QuickBooks Online, the money will be moved from the Tax Payable account to the Tax suspense account to represented that this amount has been filed with the government but is awaiting payment or refund. Once you mark your sales tax payment as being paid, the amount of money from your bank will be sent to this liability account to decrease the amount owed.
The tax accounts for the QuickBooks Online tax centre can't be split to keep track of taxes on sales and expenses separately. I can see how having them in separate accounts would be a feature that would allow you to view those amounts with ease on your balance sheet. I recommend leaving your feedback in the system by navigating to the Gear Icon, then Feedback. The comments made in that section are taken into consideration when our developers are designing new features for QuickBooks Online.
If you have any other questions, feel free to reach out here.
