Sales Tax Liability Account Balance

Hello,

In QuickBooks itself, yes that's exactly correct.  You want to double check with your 3rd party APP though to make sure you can configure it to hit the correct accounts in QuickBooks when it syncs your information.  When you make a tax payment it should Debit(decrease) the sales tax liability account and Credit(decrease) your bank account you're making the payment from.

Great!  I had one other question regarding vendor discounts when remitting sales tax.  I know there are some jurisdictions that will give a discount to companies who file their sales tax on time.  When this happens, I would assume then that the Sales Tax Liability Account will never reach $0, correct?  Would any type of journal entry need to be made to bring the Sales Tax Liability Account back to $0?

Thank you!

I would recommend checking with your accountant on which accounts to use, but yes you are correct.

Especially if you have a 3rd party app that is recording the entries and payments and then importing into QuickBooks, you would need to make some kind of JE to account for the credit your tax agency is giving you.

Hello,

We've been using Avalara for our sales tax solutions.  I've been reading online about using the adjust command button when paying sales tax.  I assume that since I am not using QuickBooks to calculate sales tax, the adjust button would not be an option.

If I'm understanding correctly, would I need to create an "Other Income Account" and create a Journal Entry for the sale tax vendor discount amount? 

Then after the sales tax remittence has been applied to the "Sales Tax Liability Account", a Journal Entry would apply the vendor discount to the "Other Income Account" since it would now be considered income?   

Thank you again!

Hi again,

I just had a few other thoughts that came to mind regarding accounting for sales tax within QuickBooks.

1. Unfortunately I've discovered the hard way that I've been delinquent on sales tax remittance in the past.  If that were to happen again, how would I go about categorizing the penalty and interest that is applied to my sales tax remittance?  I assume that this cannot be applied to the sales tax liability account, since this is money that I am not holding from purchases to remit sales tax with.  Would it apply to the other income account that I'd be using for vendor discounts?

2.  What happens when taxing jurisdictions round up or down when remitting sales tax?  Sometimes I'd wind up owing a few pennies more or less.  Would that money be applied to the sales tax liability account?

3.  I'm looking to start my QuickBooks Online company over for 2019.  If I do, should I start my sales tax liability account with my 2018 4th quarter total?  This way I can apply the sales tax remittences to this account when I pay them in January 2019.

Thank you again for all your help!

Last month, I made my sales tax payment as usual.  This entry usually credits my bank account and debits my sales tax payable account.  While my bank account was debited, I can't find the offsetting credit entry.  Where does Quickbooks enter the credit now that paying sales tax has been "improved?"

Hello, @tntappliances292. 

Thanks for joining in on this thread. You can easily see those specific payments by running a transaction detail report. No worries. It's an easy process. 

Here's how: 

1. Go to the Reports tab. 
2. Choose the Reports section. 
3. In the search bar, type in Transaction Detail Report. 
4. Once you click on the report, this will allow the report to run. 

It's that easy. If you want to customize the report to your liking, here's an article that can help you out: Customize reports in QuickBooks Online. 

Let me know if this helps. If you're still unsure of where the credit is located, don't hesitate to reach back out to me. Bye for now!

Why is it when I adjust my sales tax for the timely discount, it shows as the discount amount as both a dr and cr in my sales tax payable account?

Hi there, @Carol S1.

Sales tax is a transaction that is taken as a liability and payable by your business. Once an adjustment is made, this will affect two of your accounts in your chart of accounts.

Namely the liability and expenses accounts. Yes, this is the reason why it is posting two entries in the register of your payable account.

Kindly read and use this article to learn more about sales tax tracking in QuickBooks: Set up and Use Automated Sales tax in QuickBooks Online.

If you have other questions, please let me know and I'll be here to help.

I was manually entering my sales tax with journal entries for Q1 and for Q2 I thought uploading invoices and having QBO sales tax tracker do the work for me would be easier. However, My Q1 sales tax payment came out mid April and it threw off my Liability account. It now shows -$11,000 on my balance sheet which I know is incorrect because I owe $9,000. How can I fix this issue?

Let's take action to ensure you have the correct tax amounts in your Balance Sheet, kmm_98.

There might be an entry that's causing the negative amount for sales tax liability in your Balance Sheet. To investigate further, you can drill down the amount in the report and examine the source of the issue.

Here's how: 

1. Go back to your Balance Sheet report and look for the Sales Tax Liability account. 
2. Click the -$11,000 to open a Transaction Report.
3. Review the list of transaction to check and look for the entry that is causing the negative balance.
4. Click on the transaction to see more details.

Afterward, verify if the entry was mistakenly entered and delete it if needed. However, I strongly advise consulting your accountant before making any changes for additional guidance on this matter.

Allow me to share these articles for additional guidance when tracking sales taxes in QBO:

• Check How Much Sales Tax You Owe in QuickBooks Online
• Create or Delete a Sales Tax Adjustment in QuickBooks Online

The Community is readily available if you require any further assistance. We'd be delighted to step in and provide our guidance whenever you need it.