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J
JBF20
June 17, 2020
Question

New Sales Tax

  • June 17, 2020
  • 1 reply
  • 0 views

I had to add a new sales tax from Alberta. It is the Tourism Levy of 4% that they charge on things like hotels. When I track the tax on an expense, it moves it into its own tax expense account instead of including the tax in the travel expense account. When I do BC PST, it knows to include the PST in the purchase amount and therefor puts it in with the cost of the expense. We are not PST registered. I would like to know what I need to do to have the Tourism Levy (a form of alberta PST) be included in the expense cost, rather than tracking itself in its own expense account.

1 reply

L
LauraAB
June 17, 2020

Hello JBF20,

 

I appreciate the amount of details you've given about what you're looking to set up with your sales tax in QuickBooks Online. I know having these kinds of items track where you'd like them to is a big part of keeping everything in order in your books and I want to make sure you're able to sort this out.

 

When you're setting up a custom sales tax rate, whether you're using it on sales or purchases, the mapping you choose and other setup options are key factors in how it will track in your books.

 

When you create a custom sales tax item and choose I pay this on purchases, you're given the option to set it up as a Liability, Expense, or Non-Tracking type. When you choose Liability, it then prompts you to choose whether to map it as an ITC, adjustment, or rebate. When you set it up with these and use the code, it will map the tax amount to the sales tax liability account.

 

When you choose  Expense during that custom set up, it removes the further mapping options, and when the code is used, it creates a separate expense account for it the first time you use it. That same account will then be used moving forward with that tax code. I recommend touching base with an accountant to determine which way is the best to track the sales tax for your business's needs.

 

Regardless of which you go with, the program won't track the tax amount to the expense account you've chosen for the transaction, for example, the travel expense account you've mentioned. Tracking the sales tax to a separate account helps keeps things clear when it comes to remittances.

 

In the event you need to change the setup for the sales tax code you've created, it'll mean making the existing one inactive, setting it up again with the parameters you need, and then going back to your transactions to enter the new code. You can then also make the expense account that was created in the chart of accounts inactive as well if you don't want it. I'll walk you through these steps.

 

Make a sales tax code inactive

  1. Select Taxes from the left menu.
  2. Choose Manage sales tax.
  3. Click Make inactive for the code you no longer need.

For setting the code up again, check out the How to set up a new sales tax code article. Once you've done that, use the Enter, edit, or delete expenses in QuickBooks Online article to learn how you can go into your expense transaction to make changes. Finally, I have one more article that goes over making the account inactive in the chart of accounts. Check out the Make an account inactive section of the following article: Delete an account on your chart of accounts in QuickBooks Online

 

If you're certain your setup is correct or you'd like to have a one-on-one conversation to go over these steps, I recommend reaching out to our support team using one of the following options.

 

Phone and Chat: Click Contact Us to learn how to reach phone and chat support.

Schedule a Callback: click (?)Help in the upper right > click Contact Us > explain your situation > click Let's Talk > choose Get a callback (Note: Callback hours are the same as regular phone hours.)

Social Media: Facebook, Twitter, and Instagram from Monday to Friday between 9 a.m. and 8 p.m. ET

 

I hope that helps!

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