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Specify a Different Sales Tax Liability Account for Sales and Purchases

I'm working with a Canadian customer that has two Liability Accounts setup, one called "26600 - HST Purchases" and another called "26601 - HST Sales", both are of Type "Other Current Liabilities" and Detail Type "Current Liabilities".  The issue is when we add line items to an invoice and specify the Sales Tax of "H", it is posting tax to the "26600 - HST Purchases" account.  They'd like invoices to post tax to "26601 - HST Sales" instead.

 

Is there a way to have the Sales Tax item "H" post to a different Liability Account for when put on Invoices vs. when put on Bills?  If I go to Manage Sales Tax, I can see where I can edit the "H" Sales Tax Item, and it lists the Account Type as Liability for both Purchases and Sales, but is there any way to specify which Liability account?  They also have a lot of other accounts of type "Other Current Liabilities", so how does QB choose which one to use for a given Sales Tax Item?

 

By the way, my client is just now switching from a software that did most of the accounting through Journal Entries.  Due to the nature of how Journal Entries work, they were able to post to the two accounts listed here without any issues in their old solution.  The behavior described in this post happens when making invoices manually in QB.

 

Thank you and let me know if I can provide any more details.

Solved
Best answer 11-27-2018

Best Answers
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Moderator

Specify a Different Sales Tax Liability Account for Sales and Purchases

Hi there MattOV,

 

You'll be glad to know that when you turn on the Taxes for a newly created account everything will be automated.

 

QuickBooks Online Canada now combines the GST and HST to easily keep track of your taxes. This 2 (GST/HST Payable, GST/HST Suspense) are default accounts and automatically created. Regardless you created your own GST and HST accounts, QuickBooks Online will still use the default accounts.

 

The Tax Codes that will be used when you have enabled taxes will also be combined and called HST with 2 letter province code. An example is HST ON for Ontario.

 

You may have used the migrated Tax codes from different Accounting software or QuickBooks desktop. Since Tax rate names in QuickBooks Canada is simplified and combined with GST.

 

If you will use the correct Tax Code with QuickBooks Online, transactions will be posted on to the correct accounts and Tax return will be corrected.

 

For more information on Taxes:
https://community.intuit.com/articles/1763796-sales-tax-overview
https://community.intuit.com/articles/1771519-common-sales-tax-codes

 

Drop me a comment if you have further questions.

 

View solution in original post

1 Comment
Highlighted
Moderator

Specify a Different Sales Tax Liability Account for Sales and Purchases

Hi there MattOV,

 

You'll be glad to know that when you turn on the Taxes for a newly created account everything will be automated.

 

QuickBooks Online Canada now combines the GST and HST to easily keep track of your taxes. This 2 (GST/HST Payable, GST/HST Suspense) are default accounts and automatically created. Regardless you created your own GST and HST accounts, QuickBooks Online will still use the default accounts.

 

The Tax Codes that will be used when you have enabled taxes will also be combined and called HST with 2 letter province code. An example is HST ON for Ontario.

 

You may have used the migrated Tax codes from different Accounting software or QuickBooks desktop. Since Tax rate names in QuickBooks Canada is simplified and combined with GST.

 

If you will use the correct Tax Code with QuickBooks Online, transactions will be posted on to the correct accounts and Tax return will be corrected.

 

For more information on Taxes:
https://community.intuit.com/articles/1763796-sales-tax-overview
https://community.intuit.com/articles/1771519-common-sales-tax-codes

 

Drop me a comment if you have further questions.

 

View solution in original post

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