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Level 1

Can I switch my sales tax preferences from cash to accrual basis without messing up my previously filed reports?

How do I switch from cash basis to accrual basis without messing up previously filed sales tax reports?

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Best answer 12-10-2018

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Level 7

Can I switch my sales tax preferences from cash to accrual basis without messing up my previously filed reports?

You can't. The reports will be messed up.

View solution in original post

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Level 7

Can I switch my sales tax preferences from cash to accrual basis without messing up my previously filed reports?

You can't. The reports will be messed up.

View solution in original post

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Community Champion

Can I switch my sales tax preferences from cash to accrual basis without messing up my previously filed reports?

Sales tax reporting is a hybrid. For one thing it is not income or expense so no matter what you might fiddle with it will never ever affect your P&L.

And despite your business reporting whether it be cash basis or accrual teh sales tax you collect is a liability on your books immediately and remains until you pay.

And to top it off you can only change from Cash Basis to Accrual or reverse with IRS approval
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Level 7

Can I switch my sales tax preferences from cash to accrual basis without messing up my previously filed reports?

The question was about changing sales tax preference & changing filed reports. It had nothing to do with the IRS.
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Level 1

Can I switch my sales tax preferences from cash to accrual basis without messing up my previously filed reports?

cherylyeargin, did you find a work around and proceed with your switch from cash to accrual?  I am looking at doing the same thing.  I know it will mess reports up, but I don't think I care as you can fix that with by adjusting the sales tax item.  My dilemma is how to post the payment for the month of transition because I'll need to pay both the cash basis sales tax and the accrual basis sales tax to catch up, but that will be more than the sales tax payable account is for.

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Anonymous
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Can I switch my sales tax preferences from cash to accrual basis without messing up my previously filed reports?

Thanks for joining the discussion, @wyndamcg,

 

I appreciate your time getting in touch with the Community today. Allow me to step in for a moment and share some insights on how the accounting method affects your sales tax in QuickBooks.

 

Your accounting method or report basis affects the sales tax amount you owe. If you're using the cash basis method, you report your income when you receive it. However, when you use the accrual basis method, you report your income when you bill it.

 

To correctly account this, you must enter the correct payment date on when the sales tax payment happened.

 

Since you're aware that modifying your accounting basis will affect your reports, I recommend consulting with your accountant first. They can provide the best legal and accounting advice to ensure the change does mess up your financial records.

 

You may want to check these articles to learn more about the how sales tax works:

That should do it. If you need further help with the Sales Tax feature in QuickBooks, please let me know by clicking the Reply button below. Have a great day!

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