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smccain
Level 1

Tracking Sales by State

I have a customer who sells online only in all states. Right now, sales are below the economic threshold to collect sales and use tax in all states other than their home state. I have several questions:

1. What is the best way to calculate and track sales tax on invoices for customers who reside in the home state and not other states?

2. Is there a way to run a report that shows sales by customer's state? We need a way to monitor total sales so we can determine when they have nexus.

 

I tried just unchecking the taxable box on sales outside of the home state, but then the sales don't show up on the sales tax liability report. The best option I've found so far is to mark out-of-state customers as "tax-exempt" which shows their sales on the sales tax liability report as nontaxable. This would allow us to track the sales, but then if we establish nexus we would have to go back to all customers in that state and uncheck the tax-exempt box which seems like a hassle. Does anyone know of a better way to handle this? Thanks for any help!

1 Comment 1
MaryAnn_E
QuickBooks Team

Tracking Sales by State

Hello there, @ smccain.

 

QuickBooks Online automatically calculates sales tax amount based on the state where you have nexus and are registered to collect sales tax, the physical address of your business and on the forms, and the product mapping you've associated with the item you're selling.

 

Let's also ensure you've added the customer's address. I'll guide you how.

 

1. Go to Sales and select Customers.

2. Click on the customer's name and click on Edit.

3. Review and make sure you've added an address in the Shipping Address field.

 

You can check out this link for the detailed information: Learn how QuickBooks Online calculates sales tax. This link provides steps to calculate sales tax.

 

When you pull up the Sales Tax Liability, this report indicates only the amount of tax collected and the amount of tax paid to the state.

 

If you have any other additional questions in QuickBooks, leave a comment here. I'm always here to lend a hand.

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