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Set up and use the VAT feature in QuickBooks Online

SOLVEDby QuickBooks145Updated February 09, 2024

Learn how to set up and use the VAT feature in QuickBooks Online.

QuickBooks can automatically do the VAT calculations for you on your invoices and receipts for easy and accurate filings. Then, it lets you know when your tax payment is due, so you can file on time and avoid any surcharges or penalties.

Here's how to set it all up and get started.

QuickBooks automatically calculates the total VAT rate for each sale based on the following:

  • Your customer's VAT exempt status.
  • Where you sell and where you ship to.
  • Your service or product's VAT category.

Learn more on how QuickBooks makes each VAT calculation accurate.

QuickBooks Online keeps track of VAT on all of your transactions and calculates how much you owe.

If you just signed up to QuickBooks, set up where you charge VAT for the first time. To set up Sales Tax, follow the steps below:

  1. Go to Taxes and select Set up VAT.
  2. Choose the month you need to start calculating VAT from.
  3. Select the filing frequency.
  4. Choose the VAT accounting period.
  5. Enter your 9-digit VAT registration number.
  6. If applicable, select the Flat Rate Scheme (FRS) checkbox, then enter the percentage and registration date.
  7. Select Next, then select OK.

Once you have set up the tax centre, you can also add custom tax rates.

Rules on how to tax a product can change depending on where you sell.

When you're ready, you can assign VAT categories to anything you sell. This lets QuickBooks know how much VAT you need to charge based on what exactly you're selling.

Tax rates can also change if you ship products or perform services at your customer's address. And some customers are not required to pay VAT, like churches, schools, and other non-profit organisations.

Make sure you have your customers' correct tax status, billing address, and shipping address. Here's how to double-check your customers' info in QuickBooks.

When you're done setting things up, you can start using the VAT feature. We'll show you how it works and where you'll see it when you create an invoice or receipt for your customer.

Get a detailed look at the taxes you owe and why you owe them. This helps you make sure everything is accurate before you file and pay your VAT return.

Learn how to run the VAT Liability report to view your VAT info anytime.

This is the final step in ensuring your VAT is set up correctly, so you’re ready to file your VAT return.

QuickBooks Online tracks your payment due dates in one place so you can avoid late returns and penalties. Once it’s time to file, it’s easy to review what you owe to make sure everything is accurate. After you file, you can track your new VAT payment in QuickBooks to keep your records up to date.

Learn how to file your VAT return and record your tax payment.

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