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Level 4

Calculating tax on bills in quickbooks online

We have to pay our supplier against certain service. The physical invoice we receive from supplier contains three lines. 

1. Amount against service (will be paid to supplier), 

2. Provincial Sales Tax (that will be included in bill and will be paid to supplier), and 

3. Federal Sales Tax (that will be paid to the Tax agency - NOT to supplier)

Please guide how to record such bills in quickbooks online

Solved
Best answer September 26, 2019

Best Answers
QuickBooks Team
QuickBooks Team

Calculating tax on bills in quickbooks online

Hi there, abr_ora.

 

In QuickBooks Online (QBO), you can set up the Provincial Sales Tax as a Custom tax. Then, choose the This tax is collected on purchases option to include the sales tax when creating a bill.

 

Just follow the steps below on how to add a custom tax:

 

  1. Click Taxes in the left menu.
  2. Click the Add tax button.
  3. Choose Custom tax.
  4. Fill out all the fields needed in the Add tax panel.
  5. Place a checkmark for This tax is collected on purchases option.
  6. Enter the rate in the Purchase rate field.
  7. Place a checkmark for Purchase tax is reclaimable option if it is reclaimable.
  8. Click Save.

Once done, create a bill and enter the amount against the service. Then, choose the Provincial Sales Tax rate you've set up in the Tax column.

 

For Federal Sales Tax that will be paid only in the tax agency, I'd suggest consulting your accountant on how to properly record it in QBO.

 

I have articles here about Sales GST/VAT:

 

Please reply to this post by adding some details below if you need anything else with Sales Tax. I'm here to help.

View solution in original post

5 Comments
QuickBooks Team
QuickBooks Team

Calculating tax on bills in quickbooks online

Hi there, abr_ora.

 

In QuickBooks Online (QBO), you can set up the Provincial Sales Tax as a Custom tax. Then, choose the This tax is collected on purchases option to include the sales tax when creating a bill.

 

Just follow the steps below on how to add a custom tax:

 

  1. Click Taxes in the left menu.
  2. Click the Add tax button.
  3. Choose Custom tax.
  4. Fill out all the fields needed in the Add tax panel.
  5. Place a checkmark for This tax is collected on purchases option.
  6. Enter the rate in the Purchase rate field.
  7. Place a checkmark for Purchase tax is reclaimable option if it is reclaimable.
  8. Click Save.

Once done, create a bill and enter the amount against the service. Then, choose the Provincial Sales Tax rate you've set up in the Tax column.

 

For Federal Sales Tax that will be paid only in the tax agency, I'd suggest consulting your accountant on how to properly record it in QBO.

 

I have articles here about Sales GST/VAT:

 

Please reply to this post by adding some details below if you need anything else with Sales Tax. I'm here to help.

View solution in original post

Level 4

Calculating tax on bills in quickbooks online

Regarding Federal Sales Tax, please note that QBO is new for accountant. May you help here too...
QuickBooks Team
QuickBooks Team

Calculating tax on bills in quickbooks online

Hello there,  abr_ora.

We don't advise any accounting processes. You can provide this link to your accountant to learn more about getting started with Taxes/GST: <a rel="nofollow" target="_blank" href="https://community.intuit.com/browse/quickbooks-online-intl-taxes">https://community.intuit.com/brows...>.

Feel free to reply to this thread if you need anything else in QuickBooks Online.
Level 1

Calculating tax on bills in quickbooks online

Thank you all for some great questions and responses as they have helped me get this far. I'm hoping for a little more clarification though as far as taxes go when QBO is retrieving data from another web based software program.

 

The company I work for uses one program for all our business operations however we recently added QBO to switch over our accounting processes, leaving inventory in the original program. Both are web-based. I've set up our Sales Tax area and our Sales Invoices appear to be calculating correctly. Yet when we create an invoice in our old system, my understanding is that we leave tax off of the invoice and when it is retreived by Quickbooks, Quickbooks determines the tax to be paid (so automated sales tax is being calculated for each sales and purchases).  Each supplier expense is showing up 'out of scope' with no taxes applied. 

Can I please clarify, is tax to be applied to expenses BEFORE QBO retrieves the bill?  

QuickBooks Team

Calculating tax on bills in quickbooks online

Thanks for the clarification, @at_WES.

 

You’ll want to ensure if the expenses from your other software are tax reclaimable. If so, then the bill should also be taxable in your QuickBooks Online (QBO) account. This way, it’ll not show as out of scope in your QBO account.

 

I'd also recommend consulting with your accountant or a tax expert for additional guidance in properly recording tax in QBO.

 

To learn more about taxes in your QBO account, I got you these articles that you can use for reference:

Post a reply below if you have other concerns or questions about taxes in your QBO account. I’m more than happy to help you out again. Have a good day ahead.