QuickBooks and Sales Tax

In QuickBooks, there are multiple levels of control on taxable vs non taxable transactions. We list the settings in the order of "precedence" -> settings listed earlier will completely override later ones:

  • Customer taxable or not - if a customer is not taxable, no tax will show up
  • Sales tax item used on the receipt - If this rate is 0, tax will be 0
  • Item taxable or not - controls if the item price will be included in the taxable amounts

If you use Teapplix QuickBooks Integration, we control tax by flipping the customer taxable status on the Sales Receipt or Sales Order.

Teapplix uses QuickBooks to calculate the amount of tax. To make sure your sales receipt total matches that of your actual order, make sure you select the right Sales Tax Item in Teapplix Integration Setup.

This selected tax item must have a rate that matches your marketplace and shopping cart tax rate. If you have 2 separate tax items, one represent state tax, one represent local tax, you need to create a third item, of type "Tax Item Group", that combine both tax rates to get the proper total tax.

For each exported order, Teapplix will either set the customer taxable status to non, if no tax is charged, or tax, if sales tax are included in the order.

What you need to insure for sales tax to work correctly is that your items have the correct "taxable" status. Most physical goods sold on eBay & Amazon should be taxable.

It is also important that you review with your accountant if "Shipping & Handling" is taxable.

Note that the discount used to represent PayPal, Amazon and eBay fees must be "non-taxable". These are taken out after tax calculation is made.

For Amazon orders, Teapplix may not record the proper taxable status if Amazon does not charge sales tax for you.

For Buy.com, Teapplix do not import the tax amount in the sales receipt. So all taxes will be recorded as non-taxable out of state. This is due to Buy.com handling the tax collection and filing for you.

States with multiple tax rates
If you are in a state that has multiple tax rates, Teapplix can only apply one tax rate to your orders. You may need to edit the exported orders and change the actual tax item that applies.

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One Response to QuickBooks and Sales Tax

  1. Point of Sale says:

    Edit Sales Tax Rate in QB
    July 5th, 2010
    Many states and localities have recently increased their sales tax rates. How can you be sure to collect and remit the correct amount in QuickBooks?

    Here are the instructions:

    While you could simply overwrite the rate on your existing sales tax item with the new percentage on the date it becomes effective, please consider the following warning from the QuickBooks Help Index:

    “Note: If the sales tax rate for an existing item changes, do not change the rate. Instead, create a new sales tax item with the new rate, and make the old sales tax item inactive. If you change an existing rate, it will impact reports and transactions that occurred prior to the rate change.”

    To do this task in QuickBooks Pro/Premier or Enterprise:
    1.Go to the Lists menu and click Item List.
    2.In the Item list, double-click the sales tax item you need to change.
    3.In the Edit Item window, if necessary, change the Sales Tax Name to reflect the existing percentage.
    4.Click the Item is inactive checkbox.
    5.Click OK.
    6.Next, Create a New Sales Tax Item. Go to Lists, Item List, New Item.
    A.Loading, please wait . .
    7.From the Type drop-down list, click Sales Tax Item.
    8.Enter a sales tax name, Specifying the Locality and the new rate.
    9.Enter a description for the way this sales tax item will appear as a line item on your sales forms.
    10. Enter the sales tax rate as a percentage.

    11. From the Tax Agency drop-down list, choose the vendor you’ve set up for paying the tax. Click OK.

    12. Finally, go to Edit, Preferences, Company Preferences, Sales Tax. Change “Your most common sales tax item” drop-down to the new Sales Tax Item that you just set up.

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