Question

Reconciling Sales Tax Payable

Forum|Forum|5 years ago
August 15, 2021
3 replies
43 views

On the balance sheet we have a balance at the end of the year Sales Tax Payable, it shows as unpaid sales tax not yet paid to the government. We paid all of our sales tax and B&O each month. I am having issue trying to figure out why we have a balance. Where would I begin to solve this?

Thank you

Mariann

QuickBooks Desktop

R

Ryan_M

Moderator

I'll handle your query about sales tax payable that's in the Balance Sheet of QuickBooks Desktop (QBDT), @MP11.

We have two summary reports basis available in QBDT., and these are accrual and cash basis. For the accrual basis, the system calculates sales tax payable as soon as you invoice your customer. This is regardless of the payment amount or date, the full sales tax amount will show on the month the invoice was created.

The cash basis, on the other hand, calculates sales tax payable only when you receive the payment. The full sales tax amount will show on the month when the payment was received. Take a look at this article: Handle cash basis sales tax. It lists a few scenarios you may encounter when you receive partial payments for cash basis sales tax.

You can also keep this article for future reference: Sales Tax Liability Report and Pay Sales Tax window do not match. It lists several steps you can take to resolve this type of issue, should you encounter it in the future.

Tag me in a comment below if you have additional questions about sales tax payable in QBDT. I'll get back to you as soon as I can. Have a pleasant day!

M

MP11Author

@Ryan_M Thanks for the follow up.

I think where it gets confusing on the sales tax payable is we are set up on cash basis and that's how more than 95% of our transactions occur for sales receipts. We have some customer invoices who split payments which I believe is accrual basis the customer is making payments until service is paid for which can be split over a few different months.

Is that why when I look at sales tax payable in the balance sheet it looks like we owe money for sales tax? Is it expected to have a balance in sales tax payable?

Thanks for the assistance.

Mariann

JoesemM

QuickBooks Team

Thanks for the prompt reply, @MP11.

When the Sales Tax Liability Report (STLR) and Pay Sales Tax window show different tax due amounts, they may not have the same date ranges or report basis.

To fix this issue, check the Sales Tax Liability Report ending date, and make sure it matches the date in the Show sales tax due field. Let me show you how.

Go to QuickBooks Reports menu >
Select Vendors & Payables then Sales Tax Liability.
Delete the From date.
Ensure the To date on the report matches the date in the Show sales tax due through the box on the Pay Sales Tax window.

Then, make sure your preference is correct. Your Sales Tax Preference controls the basis of the Pay Sales Tax window, but you can change the basis of your STLR. Ensure the basis is the same.

Here's how:

Go to QuickBooks Edit menu,
Select Preferences then Sales Tax.
On the Company Preferences tab, note the selected basis in the When do you owe sales tax? box.
1. As of invoice date - Accrual basis
2. Upon receipt of payment - Cash basis.
Ensure your STLR basis matches the preference. If not, change the report basis.

If the above steps don't work, follow the next steps in this article. Just proceed to Solution 3: Sales Tax Liability Report and Pay Sales Tax window do not match.

Also, if the payment isn't paid it will show on the said report. If so, you can wait until the payment is recorded since you're using a cash basis. I'd also, suggest consulting your accountant for further guidance. They can explain more details about the setup and help you reconcile your account.

For additional resources, while managing sales taxes, adjustments, and reconciling account you can check out these links:

Please let me know how else I can help you with managing your sales taxes in QuickBooks Desktop. I'm more than happy to help. Have a good one!

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