Hi, I am a subchapter S in Pennsylvania. For new clients I offer the first half hour free, a value of 37.50. Did not think it was a big deal until I was doing my taxes and it turned out to be pretty significant amount last year. Each invoice for a new person has a service item marked "First half hour" and no price associated with it.
I think this should be a tax deduction as part of advertisng, but want to know the best way to set my QB up to port this over to TurboTax.
Let me share some information on how to handle the value of 37.50 in QuickBooks Desktop.
The first thing we’ll do is to reach out to your state agency to verify if the 37.50 value you’ve entered in QuickBooks is taxable. Once confirmed that it’s taxable, we’ll have to set up a sales tax in QuickBooks. This way, we’ll able to record the data within your book before bringing them to TurboTax.
Here are the steps on how to do it:
Open QuickBooks Desktop.
Go to the Edit menu. Then, select Preferences.
On the left side, select Sales Tax.
In the Company Preferences tab, we’ll need to add the required details:
Do you charge sales tax? Select Yes.
Click the Add sales tax item.
Set the sales tax basis, whether Accrual or Cash, depends on the accounting method you’ll use.
Choose when you pay sales tax (Monthly, Quarterly, Annually).
Here's a sample screenshot:
In case you encounter errors, or maybe the system will not allow you to save it. We can look at this article to learn how to resolve common sales tax issues.