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itsdae
Level 1

How can I record sales taxes that I was charged for a purchase? Is that considered an expense or a liability?

 
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Best answer December 10, 2018

Best Answers
Michelle-Long-CPA
Level 4

How can I record sales taxes that I was charged for a purchase? Is that considered an expense or a liability?

In the US, we don't record sales taxes paid separately -- they are included with the cost of the items purchased.  For example, if you bough office supplies, you record the total amount paid (including the sales taxes) to office supplies.

I hope this helps.

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3 Comments
Michelle-Long-CPA
Level 4

How can I record sales taxes that I was charged for a purchase? Is that considered an expense or a liability?

In the US, we don't record sales taxes paid separately -- they are included with the cost of the items purchased.  For example, if you bough office supplies, you record the total amount paid (including the sales taxes) to office supplies.

I hope this helps.

View solution in original post

Designtimecreations
Level 1

How can I record sales taxes that I was charged for a purchase? Is that considered an expense or a liability?

I have a question ? When i paid taxes for supplies or equipment ... you say it is included in the purchase .... but how do i input that into quickbooks online? Do i include it in the total or Do I make a seperate category so i know i paid some taxes already? Because i have to pay state sales tax on sales . I make tshirts and custom items so i purchase supplies raw and create them and add sales tax to customers..

 

LollyNino_C
QuickBooks Team

How can I record sales taxes that I was charged for a purchase? Is that considered an expense or a liability?

Hello there, @Designtimecreations.

 

Welcome to the Community. It would be my pleasure to lend a hand with your concern about the sales tax in QuickBooks Online. 

 

I have some information about recording sales tax. You can add the sales tax account from the product and service settings. When you create an expense or bill, QuickBooks will automatically calculate the sales tax for you. Here's how:

 

  1. From QuickBooks Online, navigate to the Taxes tab.
  2. Click Add/edit tax rates and agencies.
  3. Select New and choose either a single or combined tax rate.
  4. Enter a name, the agency you pay, and the rate's percentage. Click Save.

 

After that, go to the product settings and edit the item to apply the sales tax you created. Here's how: 

  1. Go to the Gear icon at the top, then choose Products and Services.
  2. On the Products and Services page, click New.
  3. Select Non-Inventory or Service for Item Type.
  4. Enter Sales Tax in the Name and Description fields.
  5. Leave the Sales price/rate field blank.
  6. In the Income Account field, choose the account you set up in Step 1.
  7. Make sure the Is taxable box is unchecked. Select Save and close.

 

You may also want to know more about sales tax in QuickBooks Online and manage sales tax payments

 

I've included a few resources about sales taxes that will come in handy moving forward:

 

Additionally, you can also add sales tax categories to your products and services. This helps you track your sales tax more accurately. 

 

Hit the Reply button below if you need anything else. I’ll be more than happy to help. Thanks for dropping by and take care. ​​​​​​​

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