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C_Heath-Veik
Level 2

Sales Tax Rounding Errors

I have a very specific problem. All of my sales prices include the sales tax so that I don't have to deal with change. When I have a sale for $60.00, the service price is $56.08. This always rounds up to $60.01. If I change the service price to $56.07, the total changes to $59.99. In this instance I end up having to adjust the final sales tax by a penny, up or down, depending on the service price, to make the total be $60.00 even. This workaround is small and doable for the most part (even if it is annoying) but when I have a credit card sale and don't catch the error, I will tell my clients there is an extra penny on their sale. But when I looked at the merchant account, there was no extra penny. So the sale went through fine, but the invoice in QBO still shows it's off a penny. In order to keep my books accurate, I tried to change the sale to accurately reflect the total, but the card was already processed so I couldn't change the invoice amount. How do I change the customer's invoice without deleting the sale? If I delete the invoice, won't that delete the credit card info? Will that do anything to the transaction in the merchant account? There was no error on the actual sale, just the invoice in QBO.

Solved
Best answer November 02, 2021

Best Answers
GlinetteC
Moderator

Sales Tax Rounding Errors

Hello, C_Heath-Veik.

 

I appreciate you sharing detailed information about your concerns. Let's figure this out together.

 

Deleting the invoice will affect everything. You may edit the invoice or create adjustments on the transaction. Before doing the process, I would suggest consulting your accountant for further guidance on handling this.

 

To edit the invoice:

 

  1. Navigate to the Sales tab and select Customers.
  2. Select the customer.
  3. Locate the Transaction List and find the transaction you want to edit.
  4. Click the invoice and modify it from there.
  5. Select Save.

 

Please reach back out to us if you need anything else.

View solution in original post

9 Comments 9
GlinetteC
Moderator

Sales Tax Rounding Errors

Hello, C_Heath-Veik.

 

I appreciate you sharing detailed information about your concerns. Let's figure this out together.

 

Deleting the invoice will affect everything. You may edit the invoice or create adjustments on the transaction. Before doing the process, I would suggest consulting your accountant for further guidance on handling this.

 

To edit the invoice:

 

  1. Navigate to the Sales tab and select Customers.
  2. Select the customer.
  3. Locate the Transaction List and find the transaction you want to edit.
  4. Click the invoice and modify it from there.
  5. Select Save.

 

Please reach back out to us if you need anything else.

C_Heath-Veik
Level 2

Sales Tax Rounding Errors

I just ended up adding a .01 credit to the deposit and linked it to the client who had the extra penny on their sale. 

Lien TL
Level 1

Sales Tax Rounding Errors

Hi, I have the same problem as you. I am wondering if you could show me how to adjust it? Thank you,

Lien TL
Level 1

Sales Tax Rounding Errors

Hi, I have the same problem like you. I am wondering if you could show me how to adjust it and link it to the client? Thank you.

MaryLandT
Moderator

Sales Tax Rounding Errors

Allow me to step in and share how you can create a credit for the remaining penny, levenien.

 

You can use the Credit Memo feature and apply it to the invoice. Here's how:

 

  1. Click the Plus (+) icon and select Credit Memo.
  2. Choose the customer name.
  3. Enter the Credit Memo Date.
  4. Fill in the necessary information.
  5. Click Save and close.

 

And, here's how to apply it to the invoice.

 

  1. Click + New, then Invoice.
  2. Create the invoice.
  3. Select + New, then Receive payment.
  4. Mark the credit and the invoice.
  5. Click Save and Close.

 

I'm also adding this for a video tutorial and steps of you need to automatically apply credits to future invoices:: Learn how and when to give a credit memo to customers.

 

Don't hesitate to post again if you have additional questions by commenting below. I'm always right here to help you fix the extra penny.

Lien TL
Level 1

Sales Tax Rounding Errors

Hello Mary, 

Thank you so much for your help. I have succeeded to add the credit memo to the customer, I am wondering if the credit given to the customer deducted from my income account or it is just a discount credit?

This is my case:

For example, my ecommerce sales order:

The sales of the items: $110.94

Sales tax: $8.03

Total: $118.97. This is the amount that my bank account received from the sales.

 

My QB desktop automatically round up the tax when I create an invoice:

The sales of the items: $110.94

Sales tax: $8.04

Total: $118.98.

 

It is $0.01 difference in sales tax. As your instruction, I made a $0.01 credit memo to that customer and applied it. The invoice is $118.98 - $0.01 = $118.97 now. It matches my deposit. My question are: I checked my Merchandise Sales account in my income, it is $110.94. However, the Sales Tax Payable is still $8.04. The invoice is only $118.97 now. Where does the $0.01 goes to? Also, do I need to adjust the sales tax payable to $8.03? And how do I make all the accounts match?

Thank you in advance.

ChristineJoieR
QuickBooks Team

Sales Tax Rounding Errors

Thank you for your quick reply, @Lien TL. I’m here to help with your concern about sales taxes in QuickBooks Online.


To keep your sales tax accurate, you can use the Automated Sales Tax function.

 

Here’s how to create an adjustment:

 

  1. Go to Taxes.
  2. Enter the dates and click View return to look for the period you want to adjust.
  3. Click Add an Adjustment.
  4. Enter the DateReason, and Account and for adjustment Amount.
  5. And select

 

Also, you can utilize this article to give you more information about creating sales tax adjustments.


There is an option to update historical transactions. Note that this only applicable for non-inventory and service items. Here's how to do it: 

 

  1. Simply go to Sales
  2. Click Products and Services.
  3. Find the Service item you want to change, and click on Edit.

 

Make sure you're using the exact accounts to each item.


In addition, use this link below as your reference for sales taxes in QuickBooks Online (QBO).

 

 

For other assistance regarding your tax filing, visit us anytime. I'll be right here to help you out.

Lien TL
Level 1

Sales Tax Rounding Errors

Hello Christine,

Thank you for your instruction. After decreasing $0.01 sales tax, do I need to add that amount to any other account to make the accounts balance? Because the system had me to credit one account and debit the other account. I can't just adjust the sales tax only. 

Thank you.

SarahannC
Moderator

Sales Tax Rounding Errors

We're glad to have you back, @Lien TL

 

Yes, you got it right. You can add the amount to another existing account to keep your accounts balance. However, I'd highly recommend consulting your accountant to make sure you accounts and accounting reports will remain accurate.

 

If you're looking for an accountant, you can follow the steps below:

 

  1. Go to our Find an Accountant page.
  2. In the Find an expert in section, choose what you're looking for, then use your search field to enter a City or ZIP code.
  3. Click Search. You can click on each ProAdvisor's profile to learn more information about them.

 

I've collected some resources for additional insights:

 

 

We'll be around if you have additional concerns, levenien. Take care and have a good one!

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