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Community Explorer **

Pay Sales Tax Without Collecting From Customer

My wife sells earrings at $5 each, flat. She still wants to pay Sales Tax on top of that $5 sale price, she just doesn't want to invoice the customer for it...it's a good selling point. Sure, we could "back into" the $5 total by charging around $4.70 for the earrings, which would come to exactly $5 after the $0.30 tax. But that's tedious and inexact, as each locality she sells within has a different tax rate. Sometimes it'd be $4.70, other times $4.68, etc.

 

Is there a way that she can sell her earrings for a flat rate of $5, but still keep track of the Sales Tax owed on the sale? If she marks the item as Taxable on the invoice, then it's going to put around $0.40 of Sales Tax onto the invoice, making the customer owe $5.40. If we don't mark the item as taxable, then we can't keep track of the amount owed in Sales Tax.

 

Ideally, it would be great to go ahead and put the $0.40 of Sales Tax onto the invoice along with the $5 price, and then log in 2 payments for each invoice: a $5 payment from the customer AND a $0.40 payment from [insert unknown funding source here...some contra account maybe?]. But I don't see that you can pay an invoice from any source aside from the customer themselves.

 

I know this is unique, but I appreciate your input!

4 Comments
QuickBooks Team

Re: Pay Sales Tax Without Collecting From Customer

Welcome aboard to the Online Community, chrisbishopsd.


Thanks for being detailed information about your concern.


The option not to show the sales tax rate when creating an invoice for taxable items is unavailable at this time. QuickBooks calculates the item’s tax based on the following reasons:


•    The state where you have nexus and are registered to collect sales tax.
•    The physical address of your business.
•    The physical address on the sales receipt or invoice.
•    The product mapping you have associated with the products or services you are selling.
•    The exemption status of your customer.


For QuickBooks to calculate the sales tax, you can continue entering the item’s price less the tax rate and then manually add the sales rate on the invoice to come up with $5.00.


The following article provides an overview of the automated sales tax. Additionally, you’ll find steps how to add tax categories, create a taxable item, enter an adjustment, etc: Set up and use automated sales tax.

 

Let me know if you have questions while working in QBO. I’m here anytime to help you. Have a good one.

 

Active Member

Re: Pay Sales Tax Without Collecting From Customer

The only question I have before answering..Are you tax exempt? Did you consider tax exemption ? Is your company a 501A, B or C.

Frequent Contributor *

Re: Pay Sales Tax Without Collecting From Customer

When you create the invoice the item sales amount will be $5

Then you select from “Amounts are: Inclusive of Tax”

Then you select the sales tax of the region that corresponds to the sale.

QuickBooks will do the tax calculation backwards automatically.

Your product will always cost the customer $5 dollars no matter what the tax rate.

Established Community Backer ***

Re: Pay Sales Tax Without Collecting From Customer


@DEBookkeeping wrote:

When you create the invoice the item sales amount will be $5

Then you select from “Amounts are: Inclusive of Tax”

Then you select the sales tax of the region that corresponds to the sale.

QuickBooks will do the tax calculation backwards automatically.

Your product will always cost the customer $5 dollars no matter what the tax rate.


I wish the US had that function of sales tax included, but we do not