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rconnors
August 20, 2019
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How do you know which accounts are being used as Sales accounts for the Taxes section? My sales and taxable sales don't equal and I don't know how to fix. Client has tips

  • August 20, 2019
  • 1 reply
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Best answer by AddieC

Thanks for reaching back out to clarify, rconnors. 

 

Allow me to expand on what my colleague JamesM has mentioned above. 

 

When you record a sale in QuickBooks Online, you're required to select a tax code. If no taxes are collected on the sale, you can select Zero-rated, Exempt, or Out-of-scope. Each of these three 'tax code' options will result in zero taxes recorded.

 

If you select Zero-rated or Exempt, this will mean your transactions will appear in the tax reports at zero value. By selecting Out-of-scope, however, this won't be included in the taxes section whatsoever. 

 

I recommend using the Out-of-scope tax code if you don't want to see the tips showing up in reports such as your Taxable Sales Summary. 

 

In regards to what's already been recorded, you may choose to edit the transactions that are showing the 'gap' on your report over to Out-of-scope, or leave it as it is and simply choose Out-of-scope moving forward. If you're unsure what option would be best for you at this time, I'd encourage you to consult your accountant to seek further advice. 

 

I hope this helps to clear things up for you. Let me know if you have any other questions. 

 

Have a great day! 

1 reply

J
JamesM
August 20, 2019

Hi there, 

 

Welcome to the Community. I'll be glad to answer any questions you may have. 

 

All Sales accounts affect the Taxes section. The reason I say this is that in order for any transactions to appear in the taxes section, you'd have to have assigned a tax code to the transaction. Let me know if this helps answer your question. Feel free to also let me know if I'm missing something. I'm here to help. 

R
rconnorsAuthor
August 21, 2019

The tips account is set up as a liability and are exempt from tax as far as I know. Yet when I go to the sales report it shows tips as part of sales. Then when I go to run my tax report it shows a gap between the sales being reported and the amount of tax collected because the tips are not taxed. Do you know if this is fixable? or is it considered acceptable to have the gap since I know why it is there?

Thank you

AddieC
AddieCAnswer
August 21, 2019

Thanks for reaching back out to clarify, rconnors. 

 

Allow me to expand on what my colleague JamesM has mentioned above. 

 

When you record a sale in QuickBooks Online, you're required to select a tax code. If no taxes are collected on the sale, you can select Zero-rated, Exempt, or Out-of-scope. Each of these three 'tax code' options will result in zero taxes recorded.

 

If you select Zero-rated or Exempt, this will mean your transactions will appear in the tax reports at zero value. By selecting Out-of-scope, however, this won't be included in the taxes section whatsoever. 

 

I recommend using the Out-of-scope tax code if you don't want to see the tips showing up in reports such as your Taxable Sales Summary. 

 

In regards to what's already been recorded, you may choose to edit the transactions that are showing the 'gap' on your report over to Out-of-scope, or leave it as it is and simply choose Out-of-scope moving forward. If you're unsure what option would be best for you at this time, I'd encourage you to consult your accountant to seek further advice. 

 

I hope this helps to clear things up for you. Let me know if you have any other questions. 

 

Have a great day! 

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