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R
RJBreneman
September 13, 2024
Question

Ohio Sales Tax for Services vs Tangible Items at Service Location

  • September 13, 2024
  • 1 reply
  • 0 views

I have two service companies, both are based in Franklin County, Ohio. For one company, I am using QuickBooks Desktop 2024. For the other company, I am using QuickBooks Online with Automated Sales Tax. I have encountered a discrepancy between how these two different companies calculate sales tax for a service performed at a customer's location in Delaware County, Ohio.


In each example, I have a taxable service item that is $100 and a taxable inventory item that is $100 and is a repair part sold at the service address in order to perform the service.


In QuickBooks Online, the automated sales tax calculation applies the Delaware County tax rate of 7% to the service item and the Franklin County tax rate of 7.5% to the inventory item for a total of $14.50 sales tax.


In QuickBooks Desktop, I have two tax groups set up, one at 7% for Delaware County and one at 7.5% for Franklin County. On the invoice, I can only pick one or the other. This results in having either $14.00 sales tax or $15.00 sales tax. Neither one of these matches the QuickBooks Online Automated Sales Tax calculation.

QuickBooks Online is effectively applying two different tax groups to a single invoice while QuickBooks Desktop can only apply one tax group. This is inconsistent and it seems as though one of them must be wrong.


Question: Which one of these is correct, QuickBooks Desktop with one tax group aplied to a single invoice or QuickBooks Online with two tax groups applied to a single invoice?

1 reply

R
Rasa-LilaM
September 13, 2024

I’m here to clear up your sales tax concerns and help you create a sales tax group in QuickBooks Desktop (QBDT) so the amount matches in QuickBooks Online (QBO), RJ.

 

Before we proceed, please know that I've updated my answer and added some troubleshooting steps to address the issue. With the sales tax rate configured in QBDT (one tax group) and the online platform (two tax groups), the calculated sales tax amounts will be accurate for both programs.

 

In the desktop application, you can choose only one sales tax rate for the whole invoice. To manage two or more sales tax items for a single sale, you need to create a combined sales tax group by following these steps:

 

  1. In QBDT, head to the Edit menu at the top bar and select Preferences.
  2. On the Preferences screen, go to the Sales Tax menu on the left panel and select Company Preferences.
  3. From there, click the Add sales tax item button to open the New Item window.
  4. Click the Type drop-down and pick Sales Tax Group from the list.
  5. Enter the item information in the Group Name/ Number field.
  6. Fill in the Description field.
  7. In the Tax Item column, click the drop-down and add Delaware County or Franklin County in each line.
  8. Review the information.
  9. Once done, press the OK button to save the sales tax group item.

When you create an invoice, make sure to select the newly created sales tax group from the TAX drop-down. This way, the correct rate is applied to the sales entry. Refer to this guide for more insights on how the desktop program handles sales taxes and tax codes: Set up sales tax in QuickBooks Desktop.

 

Additionally, these resources will guide you in resolving sales tax issues and managing various sales tax tasks in QBO:

 

Stay in touch if you have other product-related concerns or questions about sales taxes in the online platform and the desktop program. We're always ready to lend a helping hand.

R
RJBrenemanAuthor
September 13, 2024

@Rasa-LilaMThank you but I don't understand why you make the assumption to, "test if the sales item is damaged."  If I select either the Franklin County tax group or the Delaware County tax group in QBDT, they calculate the tax amount as expected, either at $14.00 or $15.00.  This doesn't seem to indicate anything is damaged.  The discrepancy is caused by the fact that I cannot apply one tax group to the service item and a different tax group to the inventory item as QBO does.  Are you suggesting that not being able to apply different tax groups to different invoice items in QBDT is a design flaw with QBDT?

R
rvrfrf
September 13, 2024

Thanks for following up with the Community, RJBreneman. I appreciate your detailed information.

 

When a sales transaction has multiple tax rates, you may need to show the different rates separately on your printed sales form. For these scenarios, Intuit recommends using a subtotal item and multiple tax items in the sales form.

 

Initially, you'll need to set up sales tax items to display multiple rates.

 

Here's how:
 

  1. In your top menu bar, go to Lists, then Item Lists.
  2. From the Item List window, right-click anywhere and choose New.
  3. Pick Sales Tax for your item type.
  4. Enter the Sales Tax Name, Description, Tax Rate (%), and Tax Agency information.
  5. Select OK and repeat these steps to enter as many sales tax items as needed.

 

Next, you can create a subtotal item:
 

  1. From your Lists menu, access the Item List.
  2. In the Item List window, right-click anywhere and choose New, then pick Subtotal for its item type.
  3. Enter your Item Name/Number and Description details.
  4. Select OK.

 

After creating the subtotal item, you'll be able to create your invoice using multiple sales tax items.

 

I've also included a detailed resource about working with sales taxes which may come in handy moving forward: Process sales tax adjustment

 

Please don't hesitate to send a reply if there's any additional questions. Have an awesome Friday!

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