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Abdul Rehman
Level 4

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
RCV
QuickBooks Team
QuickBooks Team

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

14 Comments
RCV
QuickBooks Team
QuickBooks Team

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

Abdul Rehman
Level 4
Regarding Federal Sales Tax, please note that QBO is new for accountant. May you help here too...
RCV
QuickBooks Team
QuickBooks Team
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.
at_WES
Level 1

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?  

JasroV
QuickBooks Team

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.

dcaroli
Level 2

Hello,

 

I have QB Online and I do not see the option "This tax is collected on purchases" when setting up sales tax. The only questions the form asks for are:

 

-Name

-Agency

-Rate

 

I also have an option for "Single" or "Combined". Neither one opens up the option needed to add sales tax to a purchase. This question has been bugging me for some time now and I have tried the tech support line several times to resolve this. Would you have any other solutions or ideas for me to get sales tax on a PO or a Bill?

 

Thanks so much,

Dan

katherinejoyceO
QuickBooks Team

Thanks for joining in this thread, @dcaroli. Let's ensure to set your Bills or Expense to inclusive of sales tax so it'll automatically apply when you create a PO or a Bill. 

 

Here's how: 

 

  1. Go to the Settings (gear icon) at the top right.
  2. Select Accounts and Settings, then go to the Advanced tab. 
  3. Click into the Accounting section to expand the accounting options.
  4. Change the Default tax rate selection to 'Inclusive of Sales tax'
  5. Click Save to record the change.

 

You can also check the specific supplier's details as there is an option to select a default sales tax code for them. If that is selected as Non-tax, then the column would not appear on any transactions to that specific supplier.

 

I've also added these articles for your future references about Sales GST/VAT in QuickBooks:

 

 

Let me know if you have additional questions about adding sales tax on bills. I'd be happy to get back and help. 

 

 

dcaroli
Level 2

Hey there,

 

Thanks for the quick reply. I just followed these instructions and I am not seeing these options either. In the accounting section under advanced - account and settings, I only show the following:

 

-First month of fiscal year

-First month of income tax year

-Accounting method

-Close the books

 

No option regarding taxes shows up for me. I know there has to be a way to do this. Adding taxes to a purchase is pretty basic for accounting. Thanks for your continued support, it is much appreciated. 

dcaroli
Level 2

Just a little more information in case it helps you to help me. I have a column in my "bill form" that says "TAX" and it has a check box in each line. The strange part is that nothing changes when I have those boxes checked or unchecked. The total remains the exact same. 

Angelyn_T
QuickBooks Team

Thank you for following up with us here on the Community page, @dcaroli.

 

I've read your original post, and I'm stepping in for a moment to share with you some insights about setting up taxes for expense transactions.

 

Usually, the option to set a tax for purchases and to set the default tax rate selection from the Accounts and Settings is available for QuickBooks Online (QBO) International. If you're subscribed to any of the international versions of QuickBooks, please make sure to select the desired code so bills will compute the accurate taxe/s.

 

  1. Select Bills from the (+) New icon.
  2. Input the details, then select the correct tax rate under the Tax column.

 

If you had the US version of QuickBooks, you only have the option to set up taxes for your sales transactions and not with purchases. As a workaround, you can either create an expense account or a service/non-inventory item and add it to your bills for the amount of taxes.

 

Here's how to add an account from your chart of accounts:

 

  1. Go to the Gear icon, then select Chart of Accounts.
  2. Select New to create a new account.
  3. In the Account Type dropdown, choose an account type (Expense).
  4. In the Detail Type dropdown, select the detail type that best fits the transactions you want to track. 
  5. Enter the account's name, and fill in the necessary information.
  6. When you're done, select Save and Close.

 

And, here's how you can add a service item to QuickBooks Online.

 

To know more about setting up taxes for QBO US and International, I recommend opening these links:

 

 

I'm also adding these screenshots for your visual references.

 

Please let me know how else I can help you with recording your transactions and taxes. I'm more than happy to help. Have a good one!

dcaroli
Level 2

Thank you so much for your assistance! This has been driving me crazy for months now, and I have been unable to get a straight answer such as yours.

 

Would you happen to know if QB Enterprise for manufacturing would have the option?

katherinejoyceO
QuickBooks Team

Thanks for coming back, @dcaroli. That explains why the options we mentioned aren't available because the steps provided were intended for QuickBooks Online. 

 

After further research, I found out that QuickBooks Enterprise isn’t designed to track sales tax automatically on non-sales transactions. You need to manually track it on bills, checks, and purchase orders.

 

For more insights, check out this article: Track sales tax on purchases from vendors.

 

Let me know if you have additional questions. I;ll be here toe help you more. 

 

 

 

 

 

SteveRay01
Level 1

Thanks for the reply... I am stock my QBO doesn't show:

 

  1. "Place a checkmark for This tax is collected on purchases option."
Jovychris_A
QuickBooks Team

Hello, @SteveRay01.

 

I can share a few steps about your scenario. After placing a checkmark for This tax is collected on purchases option, the next step would be to enter the rate in the Purchase rate field if required. Then place a checkmark for Purchase tax is reclaimable option if it is required. Then click Next to finish the setup.

Then click OK.
7.PNG

 

You can also follow the steps through this video on how to track sales tax: Tracking sales tax.

 

I've also added these articles for your future references about Sales GST/VAT in QuickBooks:

 

 

Let me know if you have additional questions about adding sales tax on bills. I'm always here to help you hand in hand.