Collecting and remitting sales tax with QuickBooks Online does not need to be difficult! To enable sales tax within QuickBooks Online, just follow a few simple steps:

  1. Navigate to the Sales Tax Center – Click Taxes in the left-hand navigation
  2. If there are no rates set up, click on Set Up Sales Tax Rates
  3. Follow the wizard to complete the information about your company and sales tax rates

After setting up the rates, go to your item lists and select whether or not each item should be taxable. You can also override the sales tax at the invoice level if needed. Edit your customer “Tax Info” to mark the customer taxable and enter their default tax code.

Preparing your sales tax return is a four-part process in QuickBooks Online.

  1. Select Taxes from the left menu
  2. Ensure Sales Tax is shown at the top (If you use payroll you may need to select Sales Tax)
  3. Next to Sales Tax at the top find the tax agency associated with the return you’d like to prepare
  4. On the Returns tab, select Prepare Return
  5. Verify the dates populated in the Start Date and End Date fields are correct
  6. Review the lines of the sales tax return with the balance owing (or refund due) at the bottom
  7. To see individual transactions, click the dollar amount
  8. To make an adjustment to a line on the sales tax return, select Adjust

The next step is to submit your sales tax return online via the Department of Revenue’s website. Use the information provided by QuickBooks Online to complete the return. Schedule the payment for the due date, then return to QuickBooks Online. Click on the balance of the tax to pay and click Record Tax Payment.

To close the sales tax period in QuickBooks Online:

  1. On the Prepare Sales Tax Return page, select Mark as filed, then select Continue
  2. QuickBooks Online creates a bill for the amount owing to the tax agency (the bill is created as a payable in your Chart of Accounts, so won’t appear in the Enter Bills window)

To record the payment in QuickBooks Online:

  1. Choose Filed from the All returns drop-down
  2. Select Record payment from the drop-down in the Action column
  3. Select the appropriate Payment type
  4. Enter the payment date
  5. Once you make the payment, you’ll see it in your Account History

 

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Jennifer Kiehne
I joined the Rochester, MN, office of Hawkins Ash CPAs in 2014. As a senior associate I specialize in payroll processing and assist with quarterly payroll tax returns. I also work with clients to determine sales tax and provider tax, and perform work comp audits.

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