How to Pay Sales Tax in QuickBooks Desktop & Online?

How to Pay Sales Tax in QuickBooks Desktop & Online?

If you are planning to collect taxes for goods and services that you offer, QuickBooks is a big helping hand for this process. Through QuickBooks, you can record the accurate information of such taxes. In addition, recording the sales tax helps you monitor and send the sales tax to the relevant tax collecting agency. To get more insights on this, learn with us how to pay sales tax in QuickBooks Desktop and QuickBooks Online.

How Do You Pay Sales Tax in QuickBooks Desktop?

To pay sales taxes in QuickBooks, you will have to perform a series of steps. First of all, you will need to set up the sales tax in QuickBooks. Once done, you have to collect the sale tax and review the sales tax reports. After making sure of everything, you can go ahead to pay sales tax through QuickBooks. For your help, we are providing detailed information on how to pay sales tax in QuickBooks Desktop:

Step 1: Setting Up the Sales Tax in QuickBooks

Before setting the sales tax items or groups, you have to review the tax rates and their requirements from your tax agency. Now, in order to record the sales tax in QuickBooks, you will have to enable the sales tax feature. Thereafter, you can start setting up the sales tax items or groups. Follow these steps to understand better:

  • Click on the “Edit” menu.
  • Then, choose the “Preferences” option.
  • Once the “Preferences” window opens, choose the “Sales Tax” option.
  • Switch to the “Company Preferences” tab.
  • Click the “Yes” button. This will enable the “Sales Tax” feature.
  • Then, click on the “Add sales tax item” option. At this point, you can start setting up the sales tax groups or sales tax items for each district, county, city, etc.
  • Once done, you can assign the sales tax code. This sales tax code will help you keep track of taxable and non-taxable sales or customers.
  • After this, you can set up the “Sales Tax Basis (Cash or Accrual)”. Make sure you consider the company’s accounting as a preference.
  • Now, start setting up the preference to pay sales tax in QuickBooks. It could be for a month, quarter, or annual.
  • Hit the “OK” button to complete the steps.

Once you successfully set up the sales tax in QuickBooks, you are now ready to set up the taxable sales. Know more in Step 2.

Step 2: Collecting Sales Tax

QuickBooks charges and calculates the sales tax automatically when you generate sales receipts, invoices, and other types of sales forms. You can still here know about three areas in the sales form that are associated with the sales tax:

  • Item Tax Code: This is used to track the taxable status of the item. The item tax code populates automatically depending on the tax code you have assigned to an item during the setup.
  • Tax Item or Group: This is the sales tax item or sales tax group setup where you will also see the corresponding tax rate for the item or group. It automatically populates depending on the tax item or group you have assigned to a customer during the setup.
  • Customer Tax Code: This code is used to track the taxable status of the customer. It automatically populates depending on the tax code you have assigned to a customer during the setup.

QuickBooks counts all the taxable line items and then multiplies them to the rate of sales tax item or sales tax group that you have assigned to a customer. This way you can get the total tax. If required, you can modify the sales tax for a particular sale.

Step 3: Review the Sales Tax Reports

QuickBooks makes the process of collecting, tracking, and sending sales tax even more convenient. By running the reports, you can review the sales tax payable. This will help you to make sure that every detail is accurate before submitting sales tax.

To review the sales tax reports, two types of reports can be performed here; Sales Tax Liability report and Sales Tax Revenue Summary report. Both the reports serve different purposes. Let’s know more about them:

Sales Tax Liability Report

This report displays the sales tax summary that you have collected and owe to the tax agency. It also includes the following by the tax district or agency:

  • Tax rate
  • Total taxable sales
  • Total nontaxable sales
  • Sales tax payable as of
  • Tax collected

Remember that tax collected is equivalent to the taxable sales that are multiplied by the tax rate. It is basically the total amount that you have collected from the sales transactions. On the other hand, sales tax payable is equal to the total tax collected subtracting the payment that you have made within a specific date range you selected for your report.

In addition, the Sales tax payable column in the report includes the payments that you have made. This way it will not always match with the total tax collected. To access the Sales Tax Liability report, you can perform the following steps in QuickBooks Desktop:

  • Navigate to the “Reports” menu.
  • Then, click on the “Vendors & Payables” option.
  • Here, you can select the “Sales Tax Liability” option.

Sales Tax Revenue Summary Report

By using the Sales Tax Revenue Summary report, you can get the summary of the sales by your tax agency as well as the sales tax code. In addition, this report will provide total sales for every tax code. This can be very helpful when you prepare the sales tax form. If you want to run a Sales Tax Revenue Summary report, you can follow these steps:

  • Open the “Reports” menu.
  • Then, click on the “Vendors & Payables” option.
  • Here, you can select the “Sales Tax Revenue Summary” option.

This is how you can run the Sales Tax Liability report and Sales Tax Revenue Summary report to review your sales tax. The information you get from these reports, you will have to provide when filing the state or provincial sales tax forms.

Step 4: Pay Sales Tax

Now that you have reviewed your sales tax, it is time to pay it through QuickBooks. Make sure you use Pay Bills or Write Checks features to pay sales tax. This will prevent errors in sales tax reports and bookkeeping.

In addition, you can go through the Pay Sales tax screen in order to generate sales tax payments in QuickBooks. This will show you the following details:

  • Sales tax amount that you owe for every sales tax item that you use.
  • It will also show the adjustment that you have added or you need to apply to the payments.

To know how to pay sales tax in QuickBooks Desktop, you can perform the following steps:

  • Click on the “Vendors” menu.
  • Then, select the “Sales Tax” option.
  • Click on the “Pay Sales Tax” option.
  • After this, select the “Pay From Accounts” drop-down menu. Then, choose the checking account that you want to use for your tax payments. Remember that this dropdown will only show the bank accounts.
  • Move to the “Show sales tax due through” section. Here, you can check that the details are correct.
  • Click on the “Starting Check No.” section and ensure that the check number is matching with the next check you wish to use.
  • The list will also display the following details:
    • Sales taxes that the company owes.
    • The tax agency to which you are paying the sales tax.
    • The amount due as of a date in a sales tax due through.
    • Please note if you see the list empty then you may have not set up the sales correctly.
  • If you are planning to make the partial payment then click on the “Amt Paid” section. Then, type the amount you want to pay for every tax item available on the list.
  • After this, click on the “Pay All Tax” section if you are willing to make the payment for the taxes due. This step is recommended especially if the tax agencies are available on the same payment schedule. Please note that the “Pay All Tax” option changes to the “Clear Selections” option once you place the checkmark for the “Pay” column.
  • Now, you can click on the “Adjust” option if you want to make the adjustment for the fine or credit.
  • If you want to take print of the checks, you can place the checkmark for the “To be printed” option.
  • Then, click the “OK” button.

If required, you can check your sales tax transactions or you can add memos to them. Thereafter, you can view and edit the details if needed. All you have to do is go to the sales tax payable account register of the agency.

How Do I Pay Sales Tax in QuickBooks Online?

To pay the sales tax in QuickBooks Online, you need to run the Sales Tax Liability report. This will help you to get all the sales tax information. Thereafter, you can start recording the sales tax. To know, learn with us how to pay sales tax in QuickBooks Online:

Step 1: Get the Sales Tax Liability Report

First of all, you will have to run the Sales Tax Liability report. This report will show you every sales tax agency, payments, and the taxable sales amount.

  • Click on the “Taxes” menu.
  • Then, click the “Sales Tax” option.
  • Choose the “Reports” option.
  • Click on the “Tax Liability Reports” option.

This report also opens the transactions report where you will see all the tax payments. If preferred, the date range can be adjusted. Or, you can click on Customize to refine your report.

To see all the tax payments, you can do the following:

  • Click on the “Taxes” menu.
  • Choose the “Sales Tax” option.
  • Here, you will see all the recorded payments in the “Paid” section. 

Now that you have reviewed the Sales Tax report by running the Tax Liability report, you are now ready to record the sales tax payments.

Step 2: Pay Sales Tax in QuickBooks

To record the sales tax payment, you can go through the Taxes menu. Here, you can make the adjustments, record payment, choose the bank account, add the payment date, and the amount. For better clarification, you can go through the following steps:

  • Click on the “Taxes” menu.
  • Then, choose the “Sales Tax” option.
  • When you see the “Sales tax” list, you can select the tax agency for which you want to record this payment.
  • Now, click the “View return” option.
  • Click on the “Add an adjustment” option and make an adjustment as preferred.
  • After that, click on the “Record Payment” option.
  • Select the “Bank Account” drop-down menu.
  • Here, you can choose the account from which you are making the payment.
  • Click on the “Payment date” option.
  • Now, go to the “Tax Payment” section and enter the amount for tax payment.
  • Once done, you can click on the “Record Tax Payment” option.
  • If you want to take print of the checks, you can place the checkmark for the “To be printed” option.
  • Then, click the “OK” button.

Important: If you don’t find any of the aforementioned features then you can also use the Auto tax feature. This is a built-in feature that helps you to set up sales tax for you automatically.

Now you have successfully learned how to pay sales tax in QuickBooks Online and QuickBooks Desktop. If required, you can adjust the sales tax payment or delete the sales tax payment in QuickBooks.

This procedure will also help you to finish other tasks related to sales tax. The following are the tasks that will also be accomplished:

  • It handles the cash basis sales tax.
  • You can also process sales tax adjustments.
  • It displays multiple sales tax items on the invoice.
  • You can also refund the sales tax that is collected from the tax-exempt customers.
  • This will help you to track sales tax on purchases from the vendors.

When working on the sales tax, you may also confront errors. If this happens to you then resolve such sales tax issues and then try again.

To Wind Up!

Filing the sales tax is one of the important tasks in business. Although you can use the auto tax feature provided by QuickBooks, you can still set up the sales tax manually. Here, we have already shown how to pay sales tax in QuickBooks Online and QuickBooks Desktop. If you still have any questions, let us know in the comment section.

If you want to merge classes or find the gross receipts in QuickBooks, read the dedicated guides mentioned below:

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