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Big-Al
September 2, 2022
Question

Default for sales tax liability

  • September 2, 2022
  • 1 reply
  • 0 views

I have been searching around how to locate the sales tax liability account that is being used as the default when invoices are entered ... I've discovered that the former accounting people somehow created two sales tax liabilities, different account types, and the one that is used for the default on invoicing should be changed.  Where is the default sales tax GL # assigned for when tax is charged on an invoice? Thanks in advance.

1 reply

katherinejoyceO
katherinejoyceO
September 3, 2022

Hello there, @Big-Al. 

 

I admire your resourcefulness in locating the sales tax liability account in an invoice.

 

Concerning the default sales tax GL # assigned for when tax is charged on an invoice, QuickBooks uses Sales Tax Payable as the default account when you create a sales tax item. Hence, we're unable to change it and assign to a different account. 

 

I'd recommend sending feedback to our developer to put your idea into consideration for future updates. Here's how:

 

  1. Click the Help menu at the top and select Send Feedback Online.
  2. Choose Product Suggestion and enter the details.
  3. Click Send Feedback.

 

You can also add your comments and suggestions directly to our QuickBooks Feedback form link. Please know that all our suggested plans are subsject to further study. 

 

Here's an article that can guide you in setting up sales tax in QuickBooks Desktop.

 

Get back to me if you have any follow-up questions about managing your sales tax liabilities. I'll be up here to help you right away.

B
Big-AlAuthor
September 6, 2022

Thank you for your response.  I do have a couple followup questions:

1 - Do you recommend that the sales tax GL account be an Accounts Payable type or an Other Current Asset?

2 - Should there be only 1 Accounts Payable type?  The setup here has a few others (like insurance payable for example) that are set up as Accounts Payable type.

3 - Can we change the account type without creating problems someplace?

4 - If our state charges the following types of sales tax:   

* state sales tax of 4.5%

* county sales tax in some counties

* city sales tax in some cities

Can we have multiple tax types for a customer, or do we have to create a code for each grouped sales tax to charge the accumulated amount, and then have to break down the reporting for counties and/or cities manually?

Thanks in advance.

R
Rea_M
September 6, 2022

Hello there, @Big-Al.

 

I've come to answer your follow-up questions about the Accounts Payable (A/P) type and sales taxes so you can manage your transactions in QuickBooks Desktop (QBDT) and keep your financial data accurate.

 

For your first question, I encourage you to reach out to your accountant. They can recommend the appropriate sales tax GL account and provide expert advice and direction tailored to your business needs.

 

With QBDT, you can use multiple A/P types/accounts. The system will let you choose one when you enter and pay your sales taxes. You can refer to this article for more details: Work with the chart of accounts in QuickBooks Desktop.

 

Yes, you can change the account type for some of your accounts (non-default ones like Bank, Asset, Liability, and Equity) to keep your Chart of Accounts accurate. However, this action isn't applicable (restricted) for A/P types. This is because this activity may cause issues that can affect your existing data.

 

In case you need to update an account's type, please see this article's Edit an account section for the complete guide: Add, edit, or delete accounts in QuickBooks Desktop.

 

Finally, when one sales transactions has multiple tax rates, you may need to show those different tax rates separately on the printed form for your customer. To do this, please see this article for the step0by-step guide: Show multiple sales tax items on an invoice.

 

Once you're done recording all your sales tax transactions, you can run reports to help you review your payables and make sure your record is accurate before paying your taxes.

 

Also, you may want to check out these articles as your reference to learn more about A/P workflows you can use and how you can troubleshoot issues you may encounter while managing sales taxes in QBDT:

 

 

Keep me posted if there's anything else you need about managing accounts and sales taxes in QBDT. I'm always ready to help. Take care, and have a great day, @Big-Al.

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