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R
RisenBuilders
March 26, 2020
Question

Journal Entry and Quickbooks adding 5% for tax

  • March 26, 2020
  • 2 replies
  • 0 views

Hi all,

 

This has been plauging me for some time. Whenever I make a journal entry, I put in the total amount and Quickbooks automaticlally adds the 5% tax. The problem is that the total amount (a purchase for example) already has the tax included. What I want to know is if there is a way for me to be able to enter the total amount and have QB understand that the number is final, and figure out what tax was paid, subtracting the number instead of adding onto it?

 

Appreciate any help,

 

Justin

2 replies

A
AndréB12
March 26, 2020

Hey Justin,

 

It's great to see you're taking a pro-active approach to making sure taxes are recorded accurately on your journal entries. It's a stellar habit that'll save you a lot of time when filing your sales tax. QuickBooks Online treats journal entries on an Exclusive of tax basis, as they're typically used to affect various accounts by specific amounts. As a workaround, you're able to enter basic mathematical functions in transaction fields. As an example, you could enter an amount of $100 inclusive of 5% GST with the following simple function:

  • 100/1.05

Selecting the GST tax rate for this line would result in an amount of 95.24 with taxes of 4.76, for a total of 100. As you're already well-versed with using journal entries, I'm confident you'll appreciate the incredible possibilities unlocked with this function.

 

I've got your back. Feel free to reach out any time, and I'll be happy to help.

    R
    RisenBuildersAuthor
    April 2, 2020

    Hi Andre,

     

    I entered the function, and it worked, so thank you for that! 
    You are right, that is pretty awesome.

     

    I have a question on the result. So I paid my accountant $50, and entered the 50/1.05 which showed up as 47.62 as a credit to expenses. Then I debited my bank account and the same 47.62 was entered into the field. So is the amount of tax paid doubling as a result giving me an incorrect total in my tax account? And if I enter $50 then it won't balance, so I am just wondering what to do here? 

     

    Thank you so much for your help, I really appreciate it! 

    S
    sdehoog16
    January 2, 2021

    How do you get the journal entry to add the sales tax automatically? I have desktop 2020 version and the tax box is greyed out and can't drop down the menu.

    Rebecca R
    Rebecca R
    January 2, 2021

    Hi there sdehoog16 and welcome to the QuickBooks Community!

     

    Adding sales tax to your transactions is crucial and it's important that it's done correctly. Setting up and applying sales tax in QuickBooks Desktop is a straightforward process. Let me go over a few things.

     

    One important thing to note when adding sales tax to a journal entry that uses a sales tax payable account is that you'll need to enter a Customer or Supplier in the Customer: Job column. If you're just generally attempting to add a journal entry to reflect sales tax paid or collected, there's a specific way to do that and an accountant can best advise you. If you're not yet working with one, you're in luck. We have a database of QuickBooks-certified accountants that are eager to help. Check out this link to help you find an accountant near you.

     

    Here are some additional articles on how sales tax works in QuickBooks Desktop. I know you'll find them helpful to review:

     

     

    Since you've indicated that the option to add tax is greyed out, it's possible that there has been damage done to your company file. Don't worry though - there are a few simple ways that you can Fix data damage on your QuickBooks Desktop company file with the help of the Rebuild Data tool and the QuickBooks File Doctor. If you're still struggling to add the sales tax to your journal entry after attempting these steps, reaching out to our support team is the next important step. They'll be able to do a screen share with you to help you determine the best course of action and to troubleshoot any issues that have arisen. 

     

    I hope you have a fantastic evening!

     

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