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Experienced Member

Avalara Avatax with QuickBooks Desktop

Is anyone using Avatax with QuickBooks Desktop but filing your own state sales tax returns?

 

When I go into Vendors>Sales Tax>Pay Sales Tax...it just creates a check payable to Avalara instead of the various states to which the tax is payable.

 

I found a brief Avalara article and I pasted a clip below.  However, the in Sales Tax Adjustment screen in QB, it is not clear to me how that adjustment should be made.  For example, if I want to reduce the amount payable to Avalara by $1,000 and increase the amount payable to  NC Dept of Revenue by $1,000, what is the adjustment in that screen?

 

Thank you for any guidance you can offer!

 

-Ann

 

Here is the article:

 

Overview
You want to know if using the native "Pay Sales Tax" feature in QuickBooks Desktop may require additional steps when using AvaTax for QuickBooks Desktop.

 

Environment
QuickBooks Desktop

 

Resolution
QuickBooks Desktop lets you generate payments. Go to Vendors > Sales Tax > Pay Sales Tax. Avalara is listed as a vendor.
If you're remitting the total amount listed to Avalara, select Avalara, and click OK.
If you need to separate the tax amounts with different vendors, you can use:
Go to Vendors > Sales Tax > Adjust Sales Tax Due
To keep your accounts balanced, remember to reduce the amount of liability for Avalara and then add the appropriate amount to the Vendor to which you are remitting sales tax.

3 Comments
QuickBooks Team

Re: Avalara Avatax with QuickBooks Desktop

Hi there, @NumbersByNelson,

 

It's nice to have you here today. I can share additional insights about paying your Sales Tax in QuickBooks Desktop.

 

If you want to track your sales tax in QuickBooks, you'll need to set up the sales tax item along with the Tax Agency you're paying. To do that follow the steps below:

  1. Click the Edit menu.
  2. Choose Preferences.
  3. On the Preferences window, select Sales Tax then go to the Company Preferences tab.
  4. Tap Yes to turn on sales tax.
  5. Click the Add sales tax item button.
  6. Choose Sales Tax Item for the Type.
  7. On the Sales Tax Name field, enter the name of the tax item. 
  8. Enter the Tax Rate (%).
  9. On the Tax Agency field, type the name of the collecting agency (set up as a Vendor). If the agency is not in the list yet, select Add New to set it up.
  10. Select OK.

Once set up, you can now assign the sales tax to your customers. Follow Step 5 of this article: Set up sales tax in QuickBooks Desktop

 

Sales taxes applied to taxable customer's transactions will go to your Sales Tax Payable. To create the payment follow the steps below:

  1. Go to the Vendors tab.
  2. Choose Sales Tax.
  3. Tap on Pay Sales Tax.

Additionally, here are some reasons why you adjust your liability:

  • You receive a credit because for the overpayment of your previous sales tax payment.
  • Your state or local government allows you to deduct the amount of sales tax paid to vendors or vendors when you're reselling the products you purchased from them.

  • Your tax agency allows a discount for making an early sales tax payment.

  • Your tax agency charged a fine, penalty, or interest because you made a late payment, didn't file on time, or did not pay your sales tax.

  • You need to account for sales tax calculation rounding differences between QuickBooks and your state sales tax form.

  • Your tax agency has a threshold over which a different sales tax rate applies.

  • Your tax agency has a sales tax holiday.

You may want to check out this article to learn more about sales tax adjustments in QuickBooks: Process sales tax adjustment

 

That should do it. Please update me if you have any questions with the steps. I'm just a post away. Have a good one!

Experienced Member

Re: Avalara Avatax with QuickBooks Desktop

Thank you for your reply.  My question actually was more related to paying sales tax to multiple states when using AvaTax to calculate sales tax.  I was able to work out the solution:

 

1.  Run Sales Tax Liability Report in Avalara to use for reference, to identify how much sales tax is due to each state..

2.  In QB, create a current liability account called Sales Tax Adjustment

3.  In QB, make two Adjustments to Sales Tax Due.

*The first is to decrease the amount of sales tax due to vendor Avalara (using the Sales Tax    Adjustment account we just created).

*The second is to increase the amount of sales tax due to vendor NC Dept of Revenue.   

4.  Go to Vendor>Sales Tax>Pay Sales Tax, and pay NC Dept of Revenue the amount owed.

 

Hope this is helpful to anyone else who is using AvaTax to calculate sales tax in multiples states (but filing their own returns).

 

Thanks!

Ann

   

 

Experienced Member

Re: Avalara Avatax with QuickBooks Desktop

Thank you for your reply.  My question was more related to paying sales tax to multiple states when using AvaTax to calculate sales tax.  I was able to work out a solution:

 

1.  In Avalara, run Sales Tax Liability report to use for reference to identify how much sales tax is owed to each state.

2.  In QB, create a new current liability account called Sales Tax Adjustment.

3.  In QB, create two sales tax adjustments for each state:

*The first is to increase the amount due to NC Dept of Revenue, using Sales Tax Adjustment account.

*The second is to decrease the amount due to Avalara.

4.  Go to Vendors>Sales Tax>Pay Sales Tax, and pay what is due to NC Dept of Revenue.

5.  Repeat the adjustments for each relevant state.

 

I hope this is helpful to anyone else who is using AvaTax to calculate sales tax, but filing their own returns.

 

Thanks!

Ann