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Set up sales tax in QuickBooks Desktop Point of Sale

SOLVEDby QuickBooks2Updated 1 year ago

Learn how to properly configure your sales tax so you can charge sales tax on taxable items automatically in QuickBooks Desktop Point of Sale. As you read on further, you will also know how to change tax codes or locations on individual sales if needed for special circumstances.

Apply a single rate tax to all taxable items

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  1. From File menu, select Setup Interview.
  2. Go to the Sales Tax tab.
  3. Select the Yes radio button on Do you collect sales tax?
  4. Enter the tax rate as a percentage and the tax agency to where you pay your taxes.
  5. Select Done.

Set up and configure your sales tax rate

Step 1: Specify that you collect sales tax

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  1. From File menu, select Preferences > Company.
  2. From the I want to option, select Sales Tax.
  3. Select the Collect Sales Tax checkbox.

Step 2: Set up sales tax location

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  1. Select the Add tax location or Edit tax location button. Note that you can use the default tax location named Local Sales Tax. It cannot be deleted but you can rename or edit to specify your preferred location name.
  2. From the Tax Location window, enter the tax location name. If you choose to add tax on sales shipped to this location, select the checkbox for Shipping to this location is taxable using the tax code and select the tax code to be applied.
  3. Seelct OK.

Step 3: Add tax codes

After adding or editing a sales tax location, you can now set up your tax codes.

Edit tax codes

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  1. Within a tax location, select Add Tax code or Edit tax code.
  2. Enter or edit the Tax code (3-character maximum) and tax code name.Note: For Tax Code Mark, you can optionally add a 1-character mark to identify items sold with this tax code.

Edit tax calculation

To specify tax rates, you can select any of the following options:

Single-tax rate

Use this to collect the same tax rate for all items at all price ranges.

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  1. From the Tax Option information, select Single-rate tax and select Next.
  2. Enter the sales tax rate as a percentage.
  3. Select Finish.

Price-dependent single rate tax

Use this if you want to collect tax only when the unit price exceeds a certain threshold.

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  1. From the Tax Option information, select Price-dependent single-rate tax, then select Next.
  2. Fill in the Enter your tax rate as a percentage field.
  3. Type in the name of your tax agency. This name is displayed on tax reports and used when sending information to QuickBooks Desktop.
  4. Enter the unit price threshold to when tax should be collected.
  5. Put a check mark on the Apply taxes only to the amount over the unit price or shipping threshold box to calculate tax only to the exceeding amount of the unit price threshold.
  6. Select Finish.

Multi-rate tax

Choose this option if you collect multiple tax rates based on item unit price and collect different rates for multiple taxing agencies.

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  1. From the Tax Option information, select Multi-rate tax, then select Next.
  2. In the Tax component (tax name), Tax agency and Tax rate fields, enter the applicable information.
  3. If the rate applies only when the unit price meets certain threshold amounts, select the Apply this tax rate to a specific item price range and enter the applicable price range. Note that you can enter lower, upper, or both price thresholds. Leave one end of the range open (blank) if it doesn't apply or is unlimited.
  4. If the rate applies only to that portion of the item price that falls within the specified range (as opposed to the entire item price), check the Apply tax to the amount if an item's price within the range.
  5. Select the Add Another Tax Rate button and repeat for each rate component of the tax code.
  6. When all components are defined, select Test to enter sample prices and ensure the tax rates are applied correctly.
  7. Select Finish when done or Back to return to the previous page.

Step 4: Assign tax codes to inventory items

To collect the correct tax amount on your inventory items, assign the tax codes defined in step 3.

  1. From the Inventory menu, select Item list.
  2. Select the item you want to assign with a specific tax code.
  3. Add a new item or select the item you want to make taxable, then select Edit.
  4. From the Basic info section, navigate to the tax field and select the appropriate tax code from the drop-down list.
  5. Select Save.
Note: If you want to assign a tax code to a specific department list, go to Inventory > Department List > Department name > Edit > select the tax code.

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