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Level 4

How to Track sales tax on purchases as a liability?

Track sales tax on purchases as a liability that will be paid later to respective tax agency. Please guide detailed steps.
3 Comments
QuickBooks Team
QuickBooks Team

How to Track sales tax on purchases as a liability?

I can help you track the sales tax on purchases as a liability (to be paid later), abr_ora.

 

You can create a Current Tax Liability account to tack the total amount of taxes collected but not yet paid to the tax agency.

 

Here's how:

 

  1. Click Accounting on the left menu.
  2. Choose Chart of Accounts.
  3. Click the New tab.
  4. Choose Current liabilities in Account Type.
  5. Choose Current Tax Liability in Detail Type.
  6. Fill out the fields for Name, Description, Currency, Default Tax Code, and Unpaid balance.
  7. Click Save and Close.

For more details about  creating a new account in the Chart of Accounts, you can check out this article: https://community.intuit.com/articles/1876266.

 

Once done, create a bill in which you will be tracking sales tax and choose the liability account you've set up. You'll need to enter the amount of sales tax in the Amount column and this will be calculated manually.

 

Then, you can see the Current Tax Liability account that has been accrued by going to the Chart of Accounts.

 

I have a link here that contains articles about managing Taxes/GST: https://community.intuit.com/browse/quickbooks-online-intl-taxes.

 

Please reply to this post if you need anything else with tracking sales tax. I'm here to help.

Level 4

How to Track sales tax on purchases as a liability?

Hi,
I am getting below error, while entering another line on the bill
"One or more charge lines do not have a tax code associated with it."
Please guide
QuickBooks Team
QuickBooks Team

How to Track sales tax on purchases as a liability?

Hello there, abr_ora.

You'll need to choose the Out of scope of Tax option since we manually created the Current Tax Liability account to tack the total amount of taxes collected.

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