We have several unpaid invoices from last year. They need be reversed out. We pay taxes on the accrual basis so taxes (including CA sales taxes) have been paid. Everything we have tried results in the invoice being "paid" by credit memo which does not reduce the gross amount and does not create an entry to credit the sales tax paid. Hope this is clear enough. Help!
Thanks for reaching out to the Community regarding your previous year’s unpaid invoices.
In situations like this, you'll need to process sales tax adjustments to properly record the transactions. If you’re using the online version, the new Sales Tax Center lets you create sales tax adjustments with just a few clicks.
I've added a link that will give you a better idea on how to Set up and use Automated Sales Tax in QBO.
o adjust your sales tax due in QuickBooks Desktop:
Next, you'll need to adjust the amounts for sales tax items. You'll find the detailed instructions in the Process sales tax adjustment article.
Just make sure to go directly to the Adjust amounts for sales tax items section for the steps. I suggest consulting with your accountant for expert advice in regard to the account to be used when creating the adjustment.
Let me know if you have additional questions about the process. I'll be right here to answer them for you. Have a good one.
Credit memo should work. Yes, it will show as "Paid" status (in QBO, they don't have adjustment type form yet), but it will clear customer account. You will need to make product/service item taxable to show credit to sales tax amount at the bottom. That will reduce the sales tax liability on next sales tax return.
Thanks for your response.
OK ... This is what I did and I cannot get the right result. The CM does "zero out" the invoice and remove it BUT, even though the item is taxable and even though the tax amount does appear in the proper place on the CM, the sales tax due remains unaffected. The total taxable sales for the period is also unaffected. I would expect both to be less. I will be going over it looking for any errors I may have made over the next few days and will be back with a response.
Hi ... thanks for the response.
I am having some difficulty wrapping my brain around this (I am NOT an accountant). I am still trying to get it right and will be back with a yea or nay in a few more days,