How to fix Sales Tax rounding differences between Sales Order and Invoice

jbusa · ‎October 01, 2024

I am trying to figure out how to clear a tax rounding issue, but since the issue isn't in the invoicing stage, I don't know the best way to correct this. (ie- I don't think a JE will help here)

A sales order is created, which was then separated out into 3 purchase orders since items were drop shipped from 3 separate vendors. Once items are shipped, it triggers us to invoice each portion- so one sales order could end up with multiple invoices. The issue is that the combined taxes on the invoices isn't matching the tax on the sales order. Now when we pull a report for open sales orders that are connected to purchase orders, we have penny discrepancies that are keeping the sales orders open even after they are fully invoiced.

We are in CO, so we use a combined sales tax group. This is only affecting one portion of the combined sales tax (I have attached a photo of the report). We want to be able to close out all of the sales orders, but even though the SOs themselves are showing as closed, they remain open on the report because the SO and invoices are off by a penny. Is there a way to clear this out? The adjustments would have to be attached to each SO in order for it to clear properly. I hope this makes sense and thank you in advance!

MarkAngeloG · ‎October 01, 2024

Hi there,

Thank you for reaching out to the QuickBooks Community. I understand how frustrating sales tax rounding issues can be, especially when they affect your ability to close out sales orders. Let me guide you through a few steps to resolve this issue.

Rounding issues can occasionally cause discrepancies in reports and prevent sales orders from being fully closed. While a journal entry may not directly resolve this, you can use adjustments to align the amounts properly. Here’s how you can address the rounding differences:

1. Review Sales Order and Invoices:

First, review the sales orders and associated invoices to understand where the discrepancies are occurring.

Navigate to the Customers menu.
Select Customer Center.
Locate the sales order and open it.
Review all connected invoices to identify the penny differences in sales tax.

2. Adjust the Sales Tax on the Invoice:

You can manually adjust the sales tax on the invoices to match the sales order. Here’s how you can do it:

Open each invoice that is associated with the sales order.
Click on the Sales Tax field.
Adjust the sales tax amount to correct the rounding difference (you might need to add or subtract a penny to align it with the sales order).

3. Create a Sales Order Adjustment Item:

If the rounding issue persists, create an adjustment item that can be added to your sales orders and invoices to correct the discrepancy.

Go to the Lists menu.
Select Item List.
Click on Item and select New.
Create an Other Charge item called Rounding Adjustment.
Link this item to an appropriate income or expense account for tracking purposes.
Save the new item.

4. Apply Rounding Adjustment:

Add the rounding adjustment item to both the sales order and invoice to balance the transaction.

Open the sales order and add the "Rounding Adjustment" item.
Enter the amount needed to correct the rounding discrepancy.
Repeat this process for the invoices connected to the sales order.
Save and close both transactions.

5. Verify and Close Sales Order:

After making the necessary adjustments, verify that the sales order now matches the invoices.

Go back to the Customer Center.
Ensure the sales order status shows as closed.
Run your reports again to confirm that the sales order no longer appears as open due to the rounding differences.

Additionally, you can also learn how to attach documents to transactions in QuickBooks Desktop.

If you have any further questions or need additional assistance about your sales tax rounding concerns, please don’t hesitate to reach out again. I'll be more than happy to assist.

View solution in original post

MarkAngeloG · ‎October 01, 2024