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Drop Shipping and Sales Tax

I am a CA wholesaler who drop ships for my customers. My problem involves when my customer (who is an out-of-state retailer without a CA seller's permit) is selling to a CA consumer. I was told by the CDTFA that I am responsible for collecting sales tax on the transaction. My invoice to my customer shows a wholesale price for the item, but I am supposed to collect sales tax based on the retail price of the item in this situation. Assuming that I know the retail amount this CA consumer was charged by my out-of-state retailer customer, how do I enter this into QB? Simply changing the item to "taxable" only charges sales tax on the wholesale amount I'm charging my customer. I am using QuickBooks Manufacturing & Wholesale software.

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Best answer 05-28-2019

Accepted Solutions
QuickBooks Team

Re: Drop Shipping and Sales Tax

Hi Janergirl951,

 

You can create a new sales tax item to show the different tax rates. Let me help you with the steps.

  1. Click Lists, then click Item List.
  2. Click the Item drop-down, then click New.
  3. Click Sales Tax Item for Type.
  4. Enter the Sales Tax Name, Description, Tax Rate (%), and Tax Agency information.
  5. Select OK.

Then, create a subtotal item. Here's how:

  1. Click Lists and then Item List.
  2. Right-select anywhere and select New.
  3. Click Subtotal for Type.
  4. Enter the Item Name/Number and Description information. Mark the columns to total.
  5. Click OK.

Once you're done, you can add the subtotal and the item list on the invoice.

 

Feel free to read this article for more information: Show multiple sales tax items on an invoice.

 

For future reference, please check out this article: Review sales tax reports.

 

Please leave a comment anytime if you have further concerns. We're here to help.

 

View solution in original post

QuickBooks Team

Re: Drop Shipping and Sales Tax

Hello there, @Janergirl951,

 

Allow me to join and clarify this for you.

 

You'll need to set up sales tax item since we're unable to customize the sales tax amount on an invoice.

 

The solution provided by my colleague above suggests that you need to use the sales tax item and manually enter the missing tax amount. This will help you add the tax amount on the wholesale invoice.

 

To learn more about collecting taxes for your goods and services, please check this out: Set up sales tax in QuickBooks Desktop.

 

Should you have follow-up questions, feel free to leave a comment below. I'm always around to help you with setting up sales tax in QuickBooks.

View solution in original post

4 Comments
QuickBooks Team

Re: Drop Shipping and Sales Tax

Hi Janergirl951,

 

You can create a new sales tax item to show the different tax rates. Let me help you with the steps.

  1. Click Lists, then click Item List.
  2. Click the Item drop-down, then click New.
  3. Click Sales Tax Item for Type.
  4. Enter the Sales Tax Name, Description, Tax Rate (%), and Tax Agency information.
  5. Select OK.

Then, create a subtotal item. Here's how:

  1. Click Lists and then Item List.
  2. Right-select anywhere and select New.
  3. Click Subtotal for Type.
  4. Enter the Item Name/Number and Description information. Mark the columns to total.
  5. Click OK.

Once you're done, you can add the subtotal and the item list on the invoice.

 

Feel free to read this article for more information: Show multiple sales tax items on an invoice.

 

For future reference, please check out this article: Review sales tax reports.

 

Please leave a comment anytime if you have further concerns. We're here to help.

 

View solution in original post

Not applicable

Re: Drop Shipping and Sales Tax

Thank you for your response! I’m not sure this solves my problem. In the illustration you provided, the sub-total is the same price as the line item above it. (2 door frames at $500 and a sub-total at $1000.)  My dilemma is because my invoice has an item priced at wholesale to my customer ($55) and then needs to have sales tax added on the retail price they charged their customer ($110). I don’t have multiple sales tax rates to charge. Does the solution you provided mean I just manually put in the sales tax amount for for $110 and then it will be added to my wholesale line item amount of $55?

QuickBooks Team

Re: Drop Shipping and Sales Tax

Hello there, @Janergirl951,

 

Allow me to join and clarify this for you.

 

You'll need to set up sales tax item since we're unable to customize the sales tax amount on an invoice.

 

The solution provided by my colleague above suggests that you need to use the sales tax item and manually enter the missing tax amount. This will help you add the tax amount on the wholesale invoice.

 

To learn more about collecting taxes for your goods and services, please check this out: Set up sales tax in QuickBooks Desktop.

 

Should you have follow-up questions, feel free to leave a comment below. I'm always around to help you with setting up sales tax in QuickBooks.

View solution in original post

Not applicable

Re: Drop Shipping and Sales Tax

Ok, I understand now. Thank you for clarifying that the steps she suggested would allow me to manually enter the sales tax amount. I appreciate the time both of you took to help me!

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