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Level 1

Sales tax "based on location" doesn't work for our company. Is there a way to set sales tax for individual customers? The only option I see is tax exempt.

We deliver and work on site but customers also pick up product from our location. Different taxing jurisdications. Most of our customers fit into one sales tax category. How can I set a default sales tax setting for our company?
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QuickBooks Team

Sales tax "based on location" doesn't work for our company. Is there a way to set sales tax for individual customers? The only option I see is tax exempt.

Hi there, j_lund.

 

By default, QuickBooks automatically do the sales tax calculations for you on your invoices and receipts based on location for easy and accurate filings. Since some of your customers choose to pick up the product instead of delivering it to them, we can set up a correct state or local rate for the type of tax you need to track using the Custom Tax Rate feature.

 

However, we're unable to set this rate as the default tax setting for your company. We'll have to select it every time we create an invoice or sales receipt. You can follow these steps in adding a single or combined custom rate:

 

  1. Select Taxes from the sidebar menu, then choose Sales tax.
  2. Click Sales tax settings.
  3. In the Custom rates section, select Add rate.
  4. Select Single or Combined.
  5. Enter the Name of the custom rate.
  6. Select the Agency you file payments to. 
  7. Enter the rate, then click Save to complete the process.

Here's how to apply the rate:

 

  1. Click the + New button, then choose Invoice or Sales receipt
  2. Select the small arrow ▼ icon next to Based on location.
  3. Choose the appropriate custom rate from the list. If you need a new custom rate, select + Add rate.
  4. Make sure the total tax amount is correct.
  5. Select Save, or Save and send to email your customer their invoice or receipt.

In case you'll need to check how much sales tax you owe, we can run the Sales Tax Liability report to help make sure that everything is accurate before you file your return to your tax agency.

 

You can always find me here if you need more help in managing your sales tax. As always, assistance is just one post away.

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Level 1

Sales tax "based on location" doesn't work for our company. Is there a way to set sales tax for individual customers? The only option I see is tax exempt.

In Texas, I was audited by the Comptroller years ago.  I sell service in 4 cities and those 4 cities had differing amounts of tax rates (at that time) ranging from 7.75% to 8.25%.  The state claimed that I should have been putting 100% of my sales in the city where my business is domiciled.

 

My question is:  Does Quickbooks Online base the sales tax on the client's address on the invoice or does it base the sales tax on the address you guys made me put in the form when I set up sales tax?

Moderator

Sales tax "based on location" doesn't work for our company. Is there a way to set sales tax for individual customers? The only option I see is tax exempt.

Thanks for joining us here, Frank Alazona.

 

I can help bring clarifications to your concern on how QuickBooks Online (QBO) calculates your sales tax.

 

Below are the list of basis on how QuickBooks automatically calculates the total tax rate for each sale:

 

  • Your customer’s tax exempt status
  • Where you sell and where you ship
  • Your service or product’s tax category

Additionally, the calculation of your sales will depend on how you set it up. On your invoice, you can Select tax rate to either be based on location or use custom rates.
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The Based on location option means taxes applied will be based on the address set up on your customer information. Custom rates on the other hand, are those sales tax created with your preferred rate.

 

To give you additional information on how sales tax works in QBO, check out the following articles:

 

Be sure to get back to me if you have additional questions. It would be my pleasure to help. Have a good one!

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