A Stepwise Approach to Set Up Automated Sales Tax in QuickBooks

You don't need to manually calculate sales tax because QuickBooks automatically calculates it on your invoices and receipts. It claims to be faster and accurate filing and lets you know when your tax payment is due so that you can also file them on time and avoid additional charges. In this blog, we have discussed the steps to set up automated sales tax in QuickBooks. Read the blog from top to bottom and implement the steps accordingly.

If you are afraid of setting things up alone, consider consulting a professional. Give a call to 1-855-888-3080and talk to a QB Pro Advisor.

An Easy Way to Set Up Automated Sales Tax in QuickBooks

Go through the steps below that can help you setup automated sales tax in QuickBooks.

Step 1: Understand how the tax is calculated in QBO

Tax rate for different sales can depend on various factors. Here are those mentioned:

• It depends on the location where you are selling or shipping.
• The category of the product or service tax.
• Customer's tax-exempt status.

Step 2: Enter where you collect tax in QBO

To accurately calculate sales taxes and returns, QBO keeps track of your State's tax laws. In case you charge sales tax outside of your state, it enables you to add other tax agencies you pay.

Here are the two methods by which you can set up where you collect sales tax:

If you just signed up for QB:

• Choose Use automatic sales tax.
• If you have updated your business information in Settings, you can see your business name and address here.
• If you are asked whether to collect sales tax outside of your state, you can choose from Yes or No.
  • If you choose Yes, there are two options you can opt for. Either enter another state where you collect sales tax in the Select an agency field, or use the drop-down to see all the options for cities and states.
• Choose Next.
• Tap X to close the window. Alternatively, choose Create Invoice.
• If you get a prompt, choose how frequently you file sales tax in the Filing frequency dropdown.
• Choose Next Agency if you collect sales tax for more than one location.
• Repeat the selection of the filing frequency for each.
• Tap Save.

If you use manual sales tax:

• You can either choose Use automatic sales tax or Get Started if your QB is ready to switch to automated sales tax.
• Now you need to see if your business address is correct.
• If it is correct, choose Next; otherwise, click on the pencil icon to update the address.
• Choose Next.
• Go through any of the ways to match your existing tax rate with the official state agency.
  • Match one rate at a time
  • Match multiple rates at once
• Click Next.
• Review the rates.
• When reviewing is done, choose Save.
• Click on X to close the window.

If you want to view a demo of automated sales tax, choose Continue.

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Step 3: Add sales tax categories to your products or services and double-check your services

When you are ready, it enables you to assign sales tax categories to the products or services you sell. It helps the QB know how much sales tax you need to charge based on the product you sell. Also, you need to verify the customer's information twice to avoid any trouble.

Step 4: Track sales tax from your customers

You can begin to use the automated sales tax after you have set up things. We'll show how it works and where you can see the created invoices or receipts.

Wrapping It Up

In the blog, we have precisely mentioned the steps to set up automated sales tax in QuickBooks. The steps include understanding the text calculation procedure, entering where you collect tax, adding sales tax categories, double-checking the services, and tracking sales tax. If you are still unable to set it up, consult a professional and get their assistance.

You may also read: A Simple Approach If QuickBooks Tax Table is not Updating