How do I record Sales Tax collected and paid by eBay

Cart us on [removed] for me information 

This is what I do if you want to have your transactions exactly match what is entered at PayPal, especially if you have the Quickbook Online App connected to download transactions from PayPal. Currently, the App will download payment transactions as sales receipts including the PayPal fee. However, Tax collected by eBay will be a separate downloaded transaction displayed as an expense.

You can't set your sales receipt items as taxable because that would require you to setup a tax item for every state agency and since eBay is paying these taxes on your behalf, you don't want them included in your sales tax liability in QBO.

Create 2 things in QBO:

1. Create a new "Other Current Liability" account in your chart of accounts. I called mine "eBay Sales Tax Payable".

2. Create a new non-inventory product, I called mine "eBay Sales Tax Collected". Make the income account the "eBay Sales Tax Payable" liability account you created in step 1.

Now when a transaction is downloaded into your online banking tab to be matched, you edit that transaction and make sure the item purchased is NOT taxable. Then add a new line item using the product "eBay Sales Tax Collected" from step 2 above, with the amount from PayPay for "Tax Collected by eBay".  When you save this transaction it may give you an error popup that the downloaded balance does not match, just click yes to continue, it will be enter correctly.

Then on the separate expense transaction downloaded from PayPal, just assign that to the liability account "eBay Sales Tax Payable", which will zero out the tax you collected in the sales receipt.

Basically now you are running a zero amount liability account with deposits from PayPal and immediate corresponding payment back to eBay for the tax collected.

This allows you to actually match downloaded transactions without having ignore them.

I'm not a CPA so this is not considered tax advice. Please consult with your accountant if you have questions on adding these transactions to Quickbooks.

Happy to answer any questions on how this works.

Thanks,

Joe