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Sales tax paid to supply vendors for contractor work but some of the supplies are sold retail.

A flooring company buys tile and pays the vendor sales tax.  When the product is used by the subcontractors to install, they don't charge the contractor.  That part is fine.  BUT some of the product is resold to individuals--i.e. boxes of tile.  In this case they mark up the tile and charge sales tax.  That is fine.  All I need to do is remit the difference in the sales tax for the "upcharge" to the retail customer.  How do I record all of this in quickbooks.  Currently I have a line item "sales tax" expense so I know how much sales tax I have paid vendors that is just "part of doing business".  But when I charge a retail customer in QBO, the sales tax goes to the sales tax liability account (all of it).  I don't owe all of it, just the upcharge.  So I know how to reduce the amount to the state (take my credit for taxes paid), but what proper entry to clear up the liability account, other than a journal entry to reduce liability and reduce "sales tax expenses".  When I pay the state for the "difference", I am coding to "sales tax" expense, which probably should be "sales tax" liability.  But that still doesn't resolve how to properly code this.  And I don't like the new sales tax program.

1 Comment
QuickBooks Team

Sales tax paid to supply vendors for contractor work but some of the supplies are sold retail.

Hi dcarter1188,


You'll want to enter and calculate the item as per tile instead of having it as one box. Then, manually enter the amount when you charge to a retail customer in QBO. 

Make sure to enter the correct sales tax charge so you don't have to create an entry or reduce sales tax expenses. 


However, if you want to enter the item by box, you can use the bundle feature in QuickBooks Online (QBO). Here's an article for more information: Introducing QuickBooks Bundles and Reorder Points.


I also recommend reaching out your accountant for other ways on how to record the items. 


For your future reference, if you want to track quantity of your items: Adjust Inventory Quantity On Hand in QuickBooks Online.


Feel free to let us know if you have any other questions. I'll make sure to help. 

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