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Set up and use automated sales tax in QuickBooks Online

by Intuit Updated 3 weeks ago

Learn how to set up and use the automated sales tax feature in QuickBooks Online.

QuickBooks can automatically do the sales tax calculations for you on your invoices and receipts for easy and accurate filings. Then, it lets you know when your tax payment is due, so you can file on time and avoid extra fees.

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Here's how to set it all up and get started:

We're rolling out automated sales tax for all QuickBooks users. If you still use manual sales tax, we'll also help you switch to the new sales tax system.

If you want to track sales tax manually, you have the option to use custom rates on invoices and receipts. You can use custom rates to manually track special taxes like meals or excise tax. Or, use custom rates if you feel more confident tracking sales tax manually.

To watch more how-to videos, visit our video section.

Step 1: Learn how QuickBooks calculates sales tax

QuickBooks automatically calculates the total sales tax rate for each sale based on the following:

  • Your customer's sales tax exempt status.
  • Where you sell and where you ship.
  • Your service or product's sales tax category.

Learn more on how QuickBooks makes each sales tax calculation accurate.

Step 2: Tell QuickBooks where you collect sales tax

QuickBooks Online keeps track of your state's tax laws to accurately calculate sales tax and returns. If you charge sales tax outside of your state, you can also add other tax agencies you pay.

There are two ways to set up where you collect sales tax:

Step 3: Add tax categories to your products and services

When you're ready, you can assign sales tax categories to anything you sell. This lets QuickBooks know how much sales tax you need to charge based on what, or where, you're selling.

Step 4: Double-check your customers' info

Tax rates can also change if you ship products or perform services at your customer's address. Not all customers are required to pay sales tax, like churches, schools, and other non-profit organizations.

Make sure you have your customers' correct tax status, billing address, and shipping address. Here's how to double-check your customers' info in QuickBooks.

Step 5: Track sales tax from your customers

When you're done setting things up, you can start using the automated sales tax feature. We'll show you how it works and where you'll see it when you create an invoice or receipt for your customer.

Step 6: Check how much you owe and why

Get a detailed look at the taxes you owe and why you owe them. This helps you make sure everything is accurate before you file and pay your sales tax return.

Learn how to run the Sales Tax Liability report to view your sales tax info anytime.

Step 7: File your sales tax return

QuickBooks Online tracks your payment due dates in one place so you can avoid late returns and extra fees. Once it's time to file, review what you owe to make sure everything is accurate. Then, you can e-file on your tax agency's website or send your return by mail. After you file, you can track your new sales tax payment in QuickBooks to keep your records up to date.

Learn how to file your sales tax return and record your tax payment.

Automatically save for your sales tax liability by using the QuickBooks Checking Smart sales tax envelope.

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