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A
Airgead
May 27, 2022
Question

Strategy for setting up new QB account: does QB apply tax rates to historic transactions?

  • May 27, 2022
  • 2 replies
  • 0 views

I'm new to QB. 

 

Imagine I connected all my banks last week, and uploaded my historic transactions for the past two years.

Then I upload my suppliers and customers today, and include their VAT and tax details. 

Will QB apply the tax/VAT rates to the list of transactions which were uploaded last week? 

 

Eg. I was purchasing adobe software in 2019 and 2020. So that's in my transactions list for those years. Adobe is my supplier, but I haven't yet uploaded my list of suppliers.  So, If I upload Adobe's tax details today, will QB automatically apply the tax to the 2019/2020 transactions?

 

I've spent 3 hours so far today chatting to 4 different QB 'experts'.  None of them could help. I'm surprised. 

My question I think is a common one.

 

 

 

2 replies

JenoP
JenoP
May 27, 2022

Hi there, Airgead.

 

I can see that you've asked a similar question about retroactively applying taxes to old transactions in a separate thread. Let me route you to this link so you can read and follow the recommendations that are posted by one of my colleagues: https://quickbooks.intuit.com/learn-support/en-us/other-questions/re-qbo-support-is-consistently-the-worst-experience-i-have-to-go/01/1091463#M103566.

 

The Community is always here if you need anything else. 

 

A
AirgeadAuthor
May 29, 2022

Hi,

thanks for your reply.  However, that response doesn't answer my question.

 

I'm wondering about the strategy for importing 3 years of purchase transaction into QB.

 

If I upload my suppliers first, and DO INCLUDE their VAT Id numbers and tax rates, does QB then automatically apply the tax to my purchases when I import 3 years of these records into QB?   

 

Surely this is a common question?  Most people joining QB are not start-ups, so surely this is a question most people consider when joining QB?

 

Thanks

MaryLandT
MaryLandT
May 30, 2022

Let me share how sales taxes work in QuickBooks Online (QBO), Airgead.

 

You need to enter your purchases as regular transactions, then make them taxable. That way, the system will automatically calculate your sales tax amounts.

 

Before, recording those purchases, you need to set up and use the sales tax feature in QBO. Doing this will help the system calculate your taxes.

 

Here's how to set it up.

 

  1. Go to Taxes and select Set up tax.
  2. Enter the Tax name, Description, and Tax agency name.
  3. Enter your Business ID no (optional).
  4. Select your Start of current tax period.
  5. Select your tax Filing frequency for GST.
  6. Select your Reporting Method (usually it'll be Accrual, unless you are a professional service provider. If in doubt, please consult your accountant).
  7. Enter Sales rate, then select This tax is applicable on purchases, if applicable.
  8. Click Next, then select OK.
  9. Once you have set up the tax centre, you can also add custom tax rates.

 

Please browse this article to learn how QBO calculates taxes and how to file them: Learn how to set up and use the sales tax feature.

 

QuickBooks has multiple options on how to record purchase transactions. You can either enter a bill, expense or write a cheque to your supplier. I'm adding this article as your guide: Learn the difference between bills, cheques, and expenses in QuickBooks Online.

 

After recording your purchases, import your bank transactions. Then, match them with the transactions you've entered above.

 

Your last step is to manually record sales tax payment to keep your liability and record accurate. You can also adjust your liability when needed so the amounts are correct each time you record prior sales tax payments.

 

Check out these articles as your guide during the process.

 

 

Upon sharing this, you can still talk to your accountant since you're handling older transactions. They can provide specific instructions to ensure your QBO account has accurate data.

 

Keep me posted if you have follow-up questions by commenting below. I'll be right here to help you.

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