I have a client that is using Davos to track daily sales tax. Each day the sales tax is collected automatically from their checking account. I tried to record each withdrawal from the Bank Feed as sales tax payable but QBO is giving me an error message that I can't add the transaction to a liability account. What am I doing wrong?
When you get that error, it means you're unable to assign a tax code when using the sales tax liability account. Default accounts are used to track the sales tax and shouldn't be used in creating transactions.
If you want to use the liability account without using the sales tax payment feature, you can record a journal entry. Then, match the entry to the bank transaction.
Here's how to create a journal entry:
Click the Plus sign (+) icon, then choose Journal Entry.
In the first line, choose the sales tax liability account.
Enter the same amount shown on the bank feed transaction under Debits.
In the second line, choose the bank account connected to bank feeds.
Enter the same amount shown on the bank feed transaction under Credits.
Click Save and close.
Go back to the Banking page, then match the journal entry to the downloaded transaction.
If you have further questions, you can leave a comment below.