P&L Does Not Match Sales Tax Liability Summary

Hello, bronxbomber91. 

Excellent for identifying the transactions that cause discrepancy of your account's. In order to guarantee that your credit memo will reduce the tax liability summary report. Open the credit memo and check if it's taxable. Once it's taxable, we can adjust the amount until it will be equal to the total amount of the transactions.  

For example, the credit memo is 500 worth of amount. Then the transaction is taxable, you can adjust the amount until it will become the same amount of the total.
 

Then we can run the Profit and Loss and Sales Tax Liability Summary report to check if they are already balanced. 

I've added an article that will help you personalize your reports and add the details that matter the most to your business: Customize reports in QuickBooks Desktop.

If you have any other concerns or questions, please don't hesitate to post it again on this thread. I want to make sure this is taken care of.

Okay, but what if the transaction is not taxable? As I just want credit memo transactions to be deducted from the total sales in both reports.

Because as it sits right now, the sales tax liability summary shows about $5000 more sales for this period (compared to the P&L sales). So I am trying to find out how to get them to match.

I hope you're doing well, @bronxbomber91.

I'm very eager to lend a hand about why the Profit and Loss (P&L)won't match the Sales Tax Liability report (STLR) in QuickBooks Desktop (QBDT).
 

The total sales and total income won't always match due to transactions that may emerge in a data file that will unlikely for them to match. We can fix this by comparing the details of the totals by running the STLR and the P&L Standard report.

Here's how to run the STLR.

1. From the Reports menu, select Vendors & Payables, then Sales Tax Liability.
2. Double-click the Total for Total Sales column. This will open the Sales Tax Revenue QuickZoom report.
   
3. Click Customize Report.
4. Choose the correct report basis, Accrual or Cash.
5. Under the Display tab, select the date range for the report.
6. Under the Filters tab, choose Accounts.
7. From the drop-down menu, select All ordinary income accounts.
   
8. Still, under the Filters tab, select Transaction Type and choose Multiple Transaction Types from the drop-down menu.
9. In the box that opens, put a checkmark next to all transaction types excluding the Invoice and Sale Receipt.
10. Hit OK to return to the Filters window.
11. Select OK again to return to the report.

Here's how to pull up the P&L Standard report.

1. From the Reports menu, select Company & Financial, then Profit & Loss Standard.
2. Double-click Total Income.
   
3. Click Customize Report.
4. Choose the correct report basis, Accrual or Cash.
5. On the Display tab, select the same date range.
6. Under the Filters tab, choose Accounts.
7. From the drop-down menu, select All ordinary income accounts.
   
8. Still, under the Filters tab, select Transaction Type and choose Multiple Transaction Types from the drop-down menu.
9. In the box that opens, put a checkmark next to all transaction types excluding the Invoice and Sale Receipt.
10. Hit OK to return to the Filters window.
11. Select OK again to return to the report.

If you encounter any other issues with the Sales Tax Liability and need to pay taxes, please refer to these articles.

• Resolve common issues when running Sales Tax Liability Report.
• Pay sales tax.

I'm just around the corner if you still need more help while managing the STLR in QuickBooks. I want to make sure that everything is sorted out. Take care and have a great day!

Hi,

Thank you for your detailed response. I have actually already ran both reports and identified the transactions (which ended up being credit memos). The issue I am having is how to now fix the issue so that both reports show the same numbers.

Credit memos will appear on the sales tax report just like invoices, only backwards.

Are you running the sales tax report on a cash basis, because you don't owe the sales tax until you are paid by your customers? If so, is the credit memo applied to anything? Did you issue a refund check paying it off, for example, or apply it to an invoice to pay the invoice and the credit memo both off? If it is not applied to anything that is why it does not appear on your sales tax report (on a cash basis) but will appear on your sales reports and P&L if they're run on an accrual basis.

Hi bronxbomber91:

Were you able to figure out the issue?  I am experiencing same thing.  Thanks!

Hi there, @lagniappe_24.

Thank you for reaching out. I would love to help you, but I just need more specific information so I can address your concerns properly. Could you please provide me with more details about the issue you're facing so that I can assist you better?

Any additional information would help me check for solutions to address your concerns better. Please don't hesitate to provide any further details or a screenshot as a visual guide to explain your scenario more clearly.

Hi bronxbomber91 : I am having the same issue.  Were you able to find a resolution?  Thanks

The crux of the issue is that sales and income are not the same thing. There should be no expectation that any sales report's totals will be the same as any number you see on a Profit & Loss statement, much less Total Income.

Sales: Money from things sold to customers - most all detail line items on "sales" type transactions including  Invoices and Sales Receipts and Credit Memos. The line items on these transactions can use most any type of account including income, COGS, expense, other income, and other expense. And also balance sheet accounts. For example, you can use an invoice to sell an asset like a car, which won't show up on the P&L at all. Also, discount line items are excluded from sales reports, and they typically use income accounts.

Income: Money amounts assigned to income accounts using any type of transaction. Can be an invoice, a deposit or a check or a credit card or a bill or a journal. Anything that posts.

So, the only way a sales report and a P&L might agree is if you both only use income accounts on sales transactions and you always use income accounts on sales transactions - a practice which in turn would preclude everyone from keeping a complete set of books.