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Set up your sales tax in QuickBooks Online

by Intuit•371• Updated a day ago

In the Sales Tax Center in QuickBooks Online, you can add and edit tax agencies, rates, and settings. This guide covers how to use the manual sales tax feature.

Note: This feature is limited for QuickBooks Online Free and QuickBooks Online Lite. Upgrade your plan to get more features. Go to Settings , then Subscriptions and billing. Then select Upgrade your plan.

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Note: If you don't see the settings mentioned below, you may be using the Auto Sales Tax feature. Check out Set up and use automated sales tax for more information.

What you’ll need

Access to your QuickBooks Online account.
The names of your tax agencies and their specific tax percentages.
Knowledge of whether you pay a single rate or multiple rates to different jurisdictions.

Turn on and configure sales tax settings

You can turn sales tax on or off by editing sales tax settings. If you already charged sales tax on earlier transactions, you won't be able to disable sales tax without first removing sales tax from those earlier transactions.

Go to All apps , then Sales Tax, then Sales tax settings (Take me there).
Select Yes, if you charge sales tax. If you don't charge sales tax, select No.
(Optional) Set a default tax rate to automatically apply to new sales forms.
(Optional) Select Mark all new customers are taxable if your new customers are typically not tax-exempt.
(Optional) Select Mark all new products and services are taxable to automatically select the tax column for items on forms.
Select Save.

Note: You can change any of these settings for individual customers or forms.

Add sales tax rates and agencies

Note: Tax agencies are the cities and county jurisdictions that you pay for. QuickBooks Online provides the calculated amount that you owe to each agency and the due date.

Add a single tax rate and agency

Use a single rate if you pay just one rate to a single agency.

Go to All apps , then Sales Tax, then Overview (Take me there).
If this is your first time, select Get Started and follow the guided workflow for your state.
If you need to add more rates, select Sales Tax Settings, then New, and choose a single tax rate.
Enter the name for the tax, the agency you pay, and the percentage rate.
Select Save.

Add a combined tax rate

If you report sales tax to multiple agencies, such as a city, county, and state, you can create a combined rate. We track each agency’s amount separately, but your customers will only see the combined total on their forms.

You can add up to 7 components to a combined tax rate.
Classic sales tax offers 5 maximum combined rates.
Automated sales tax offers 7 maximum combined rates.

Go to All apps , then Sales Tax, then Overview (Take me there).
Select Add Custom Rate from the Add Agency dropdown menu.
Select Combined tax rate.
Enter a name for the combined rate and the individual sales tax requirements.
Select Add Another Rate if you need to add more than 2 components.
Select Save.

Rename a tax agency

To edit an agency's name:

Go to All apps , then Sales Tax, then Sales tax settings (Take me there).
Under the agency name that you want to edit, select rename.
Enter the new name, then select Save.

Note: You can't make changes to the Tax Rate field. If the rate needs to change, deactivate the existing tax name and rate. Then create a new tax with the rate you want.

Deactivate a tax rate

If you no longer use a specific tax rate, you can make it inactive.

Go to All apps , then Sales Tax, then Sales tax settings (Take me there).
Choose a tax rate name and select Edit.
Select Make Inactive.

Change the sales tax center

You can adjust the specific methods and accounting basis within your tax center settings.

Go to All apps , then Sales Tax, then Sales tax settings (Take me there).
Within each sales tax agency specific method, you can change the sales tax center.

For more information regarding the Accounting Basis, see the difference between cash and accrual accounting methods.

Results

Once you have saved your settings, your new tax rates will appear in the Sales Tax Rate and Agencies list. You can now select these rates when creating invoices or other sales forms. You can also track what you owe in the Sales Tax Owed list or through a Sales Tax Liability report.