How do I record sales tax paid when I have a sales tax payable liability account?

Hello there, noahtrotter.

I understand the importance of ensuring your tax payments are recorded correctly. I'll help you record your tax payments in QuickBooks Online.

Here's how:

1. From the left menu, go to Taxes, then select Sales tax.
2. Find the return you filed and click View Tax Return.
   Note: If you paid for an older return, use the Tax Period Date dropdown menu to select a tax period or custom date range.
3. Choose a filing method, then hit Record payment.
4. Add these payment details:
   • Tax amount
   • Payment date
   • Bank account
5. Click Record payment.
6. Select Back to sales tax center.

If you are going to follow this process, you cannot choose an account to use for the payment as QuickBooks created a default account for sales taxes which is named based on the tax agency.

However, if you want to choose an account to use, you can create a Journal Entry.

Here's how:

1. Click the + New button.
2. Select Journal entry.
3. On the first line, select an account from the Account field. Depending on if you need to debit or credit the account, enter the amount in the correct column.
4. On the next line, select the other account you're moving money to or from. Depending on if you entered a debit or credit on the first line, enter the same amount in the opposite column.
5. Check the amounts - you should have the same amount in the Credit column on one line and the Debit column on the other. It means the accounts are in balance.
6. Enter information in the memo section to know why you made the journal entry.
7. Hit Save and new or Save and close.

For the detailed steps, refer to this article: Create journal entries in QuickBooks Online.  This way, you can move money between accounts. It is also best to consult your accountant before making any changes to your account. If you don't have one, click this link: Find an accountant.

I'm also adding this article to guide you on how cash and accrual accounting affect sales tax: Choose between cash and accrual accounting methods in QuickBooks Online.

Feel free to click the Reply button below if you have questions about tax payments. I'm always here to help. Have a great day.

Thanks for the info! I am still running into a problem. When I create a journal entry it increases the amount of both the liability and the expense. How do I record my "Sales Tax Payable" Liability account decreasing while my "Sales tax paid" expense account increases?

Collecting sales taxes increases your liability, while paying sales taxes decreases it. If you're accurately recording your collection of sales taxes, there is no need to consider sales tax paid as an expense.

Collecting sales taxes increases your liability while paying sales taxes decreases it. If you're accurately recording your collection of sales taxes, there is no need to consider sales tax paid as an expense.