Record 3rd party sales tax payments

You can use the Bank Deposits feature in QuickBooks Desktop (QBDT) to manually record your revenue, sales tax remitted, and Shopify processing fees, Bray3214.

1. On the Homepage, select Banking, then click Make Deposits.
2. In the Make Deposits window, choose the account where you want to record the deposit from the Deposit To dropdown.
   
3. Under Received From, select the customer. In From Account, choose the appropriate revenue account, and enter the total sales revenue in the Amount field.
4. To record the sales tax remitted and Shopify processing fees, add separate line items as negative amounts to adjust the total deposit to match the actual amount paid to you.
5. Add a memo if needed for clarity.
6. When finished, click Save & Close.

I recommend consulting your accountant to ensure proper recording methods, account classifications, and the use of appropriate accounts for deposits and processing fees.

If you have any additional concerns, please don’t hesitate to let us know.

I really do appreciate your response.  I usually generate an invoice to code the payment to, but what do I put in the sales tax section of the invoice?

Thanks for your follow-up, Bray3214.

Since Shopify handles sales tax remittance directly, and you're entering the net payment you receive into QuickBooks, it's best to manage the sales tax within the deposit record instead of on an invoice.

However, since you prefer to use an invoice for recording sales revenue, processing fees, and the sales tax that Shopify remits on your behalf, we can create a sales tax adjustment item. Here's how:

1. Open your QuickBooks Desktop and go to the Lists menu.
2. Select the Item List.
3. From the Item button, select New.
4. Choose the type of item.
5. Name the item something like "Sales Tax Remitted by Shopify" for clarity.
6. For the Account field, consult with your accountant for verification on the specific account to use.
7. Save your item.

Once done, create an invoice and enter the necessary line items for the products sold. Here's how:

1. Head to the Customers menu, then Customer Center.
2. Click the New Transactions dropdown, then select Invoices.
3. Choose the customer name and product details.
4. In the first line item, enter the products sold and their amount.
5. On the next line, add the adjustment item you created and enter the amount of sales tax Shopify remitted to the state as a negative value.
6. Add/create a separate line item for the processing fee and enter the amount as negative.
7. Scroll to the bottom where the Tax field is located. Select the tax rate that would normally apply to the transaction if you charge tax, or you can simply set the sales tax to "Out of Scope" or "Non-Taxable".
8. Save your invoice.

Entering a negative value for your sales tax remitted and fee ensures your total invoice reflects that the sales tax was not directly received by you, but will still account for it properly in your reports.

The invoice should now reflect the total payment due.

Sales tax remittance processes can be complex, so I highly recommend consulting with your accountant or a tax professional to ensure everything aligns with your specific reporting and compliance requirements.

Please leave a reply below if you have further questions or concerns. We'd be glad to provide the necessary help.