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Manually track sales tax in QuickBooks Self-Employed

by Intuit Updated 1 year ago

Learn how sales tax works in QuickBooks Self-Employed.

When you're self-employed, you're responsible for collecting sales tax for the products and services you sell. Check your state and local governments' tax franchise boards to see what you need to collect and when to send it.

QuickBooks Self-Employed tracks income from the products and services you sell. However, it doesn't automatically calculate sales tax. This isn't a problem for most users. Your payment processing service usually includes sales tax when you make a sale. It also tracks how much sales tax you've collected throughout the year. This is the easiest way to track sales tax.

If you want to track sales tax in QuickBooks Self-Employed, you can manually add it. We'll show you how to create a sales tax item you can add to invoices like a product or service Note: You won't be able to track manually added sales tax on your financial reports.

What's sales tax?

In the US, sales tax is a state-mandated surcharge on sales of goods and services. Sellers, merchants, and service providers charge sales tax at the time of sale. Sellers are responsible for collecting sales tax and sending it to the government.

What are sales tax rates?

Sales tax rates vary by state, city, and location. Some states, like Delaware, Montana, New Hampshire, and Oregon, don't require sellers to collect sales tax. Some counties and cities may collect an additional, separate sales tax.
Customers usually see a single, combined sales tax rate on their invoices or receipts. For example, if your state has a 7.5% tax and your county has a 1% tax, customers may see 8.5% on their receipt. This makes things easy for customers. Sellers need to know the separate sales tax rates and government agencies you collect sales tax for so you can send the correct amount to each.

Online sales may also complicate things. If you sell goods or products online from a state that collects sales tax, you may need to collect sales tax. Learn more about sales tax and online sales.

Rules also vary for other reasons, not just location. Always check your state government's website or reach out to a tax professional so you know what to collect.

See how much sales tax you collected

Refer to your payment processing service to see the total sales tax you've collected.

Payment services may add sales tax when you process payments. If you sell on an online platform like Etsy, you may be able to also see what you've collected on your seller profile.

If your payment processing service doesn't add sales tax to transactions, you'll need to do it manually.

Add sales tax to transactions in QuickBooks

Add sales tax to an invoice

Each time you need to collect sales tax, you need to add it manually. Create a specific sales tax line item you can add to invoices:

  1. Go to the Invoices menu.
  2. Select Create invoice.
  3. Select Add product or service.
  4. Select the Product or Service dropdown and then + Add new.
  5. Enter "Manual sales tax" for the name and enter your sales tax rate.
  6. Select Save.

Now you can add the "Manual sales tax" item any time you create an invoice. Here are a few things to keep in mind:

  • Always review the Amount field. Make sure you calculate the sales tax amount for the purchase total.
  • Always note in the Description field how much sales tax you added to the invoice. This will help you stay organized during tax season.

Add sales tax to downloaded transactions

Check your payment processing service. All the info should be there.

When QuickBooks Self-Employed downloads transactions from your bank, the sales tax gets combined with the sales total. The two rates aren't separated.

See sales tax totals in QuickBooks

Unfortunately, there's no report in QuickBooks Self-Employed that gives you totals for line items on your invoices.

You need to review each invoice you manually added sales tax to.

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