Recording Sales and Use Tax

I can share another way on how to handle sales taxes in QuickBooks Desktop, @Denise-Cranford.

If you're not using sales in QuickBooks Desktop to accumulate sales tax liability,  then there's no need to set up sales tax in QuickBooks Desktop. Instead, we can record a regular check and use an account to accrue the tax you owe. I'd suggest consulting an accountant on what posting accounts you'll need to apply when creating the transaction. Here's how:

1. Go to the Banking menu and select Write Checks.
2. In the Bank Account section, choose an account where the money will be taken from.
3. Enter the balance of the given bank account as of the date of writing the checks in the Ending Balance field. 
4. Pay to the Order of: Should be the Payee Name or whoever the check was issued for.
5. Use the date when you issue the check.
6. Check amount in numbers in the Amount column. Below the Pay to the order field will automatically show the Dollar amount in words.
7. Put a checkmark in the Print Later checkbox if you need to print the check at a later time or the Pay Online checkbox if you will process an online payment.
8. Expenses or Items tab
   • Use the Expense tab to enter shipping charges, liability (in cases of payments for liabilities/loans), and other expenses not associated with any item in QuickBooks.
   • Use the Item tab to choose the appropriate item on the drop-down list.
9. Press Save & Close

Then, run the Transaction Detail by Account report to see the updated amount in the Sales Tax Liability account. Let me show you how:

1. Go to Reports on the top menu.
2. Choose Accountant & Taxes and tap Transaction Detail by Account.
3. Click Customize Report. 
4. Tap Filters.
5. Enter Account in the search field and select Multiple Accounts. 
6. From the list, choose the sales tax liability account.
7. Press OK and OK.

Then, you may want to customize them to personalize the details and formats you wish. You also have the option to memorize them to save their customization settings for quick access in the future.

Feel free to browse this link here if you need help with managing your company's financial reports. It'll route you to our general topics with articles.

You can always update us after trying the steps as I want to ensure this is resolved for you. Just leave a comment below and I'll get back to you. Take care always. 

You can enter a bill and pay it.  Enter a bill:

1) Enter your sales tax agency as the vendor (the state agency you send the payment to).

2) On the Expenses tab, enter your sales tax liability account on the 'Expenses' tab and the amount due.

3) Use the 'Memo' field to note which month's sales tax this applies to.

4) Save & Close.

5) Then, pay the bill. 

In regard to the negative liability balance - you mentioned that you don't track sales tax in QuickBooks, but do you track total sales?  I'm just trying to figure out what account to use as the offset to clear the negative sales tax liability balance.

We don't necessarily track sales. All of our income is entered as "cash deposit" or "merchant services deposit". The offsetting account is where I'm getting stuck too. I appreciate your help. And let me know if you need any more info so that I can try and resolve this. Thanks!

@jval1 

Out of curiosity, how many months or years of monthly sales tax payments have been accumulating in this sales tax liability account?

Just so I understand: the clinic records cash and cc deposits in QuickBooks as income?.  Those deposits must include the sales tax collected, correct?  If so, how is the clinic removing the sales tax collected from sales so as to not overstate the clinic's income?  If sales tax is not being segregated from the deposits, the adjusting journal entry would be to debit (reduce) income and credit (increase) the sales tax liability account.