Understanding QuickBooks Sales Tax 2024
Please refer to the Certum Solutions YouTube tutorial: Understanding QuickBooks Sales Tax 2024 for clarification and a visual demonstration below. This article is intended to be a written summary of video content.
This video will explain where to find the sales tax module in QuickBooks Online and where your sales report can be found in Shopify for e-commerce enterprises.
Sales tax is a trust tax. A vendor or merchant collects the revenue from the customer and holds it “in trust” to be paid to the government, whether state or local. It's important to remember that, unless Shopify is working in conjunction with a third-party app, it does not remit sales tax for you.
Taxable goods and services can vary from state to state. That’s why a third-party app such as Avalara can be beneficial.
In QuickBooks make sure your items are marked “taxable” if applicable. Click Settings, Lists, then Product and Services. Under Type, you’ll find it categorized. Service items are usually not taxable by the state but could be taxable if it’s included in a product’s installation cost. You can find information on what’s taxable on your state’s Department of Revenue website.
Different states have different deadlines for remittance of sales tax. You need to be aware of whether you’re weekly, bi-weekly, quarterly, etc.
From the Product and Services page in QuickBooks, you can edit an item if needed. You’ll find inventory, non-inventory and services categories which may or may not be taxable. Again, check with your state’s website or your accountant. When editing an item, you will find the sales tax heading. Clicking that will bring you to the description of the product or service. There is a search bar that will help you find the category of the item. Then you can choose taxable or non-taxable.
This choice is determined by where your customer is, not your physical location. Whether or not you have to pay sales tax depends upon your presence in the customer’s state. This is called “nexus” and is based on the number of transactions held in that state or the dollar amount of such transactions.
Under the Accountant tab, you will find Taxes. Using the information you entered about the product or service; QuickBooks will show you the taxable amount. To repeat, this information is totally dependent on the information you have entered. QuickBooks also gives you the option to view your tax returns.
Your tax returns will show you how you’ve got your filings set up; as quarterly or other. It will also show you the due date. From this page, you can run your tax liability report. It’s a good idea to look at several reports/sources to make sure the information is correct. Once it’s paid, you can record your payment.
To view your reports in Shopify, you will navigate to that site, click on Analytics, then Reports which will show the sales tax reports. There will be a United States Sales Tax category. If Shopify and QuickBooks are connected, your sales tax information should be transferred over. It’s important to check for accuracy if you’re working on multiple platforms.
Please feel free to contact Certum Solutions if you have further questions or need any type of assistance.