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LadyM1
October 4, 2024
Question

Sales tax collected is posting to wrong payable account - how to fix?

  • October 4, 2024
  • 1 reply
  • 0 views

Quickbooks Intuit Support helped me set up the new sales tax settings end of August '24.

Today, I realized that all the sales tax I have collected has been booked to an incorrect franchise fee (sales tax) payable account.  Where/how do I fix this?

 

As an example, I created a new invoice dated 11/1/24 for a current customer.  Customer resides in Eureka and location was correctly set in the customer account.   The invoice was created and I selected the tax rate of 3% for Eureka residents.  The tax amount created correctly, but booked to the wrong sales tax payable account.

As you can see on the attached screengrab, the invoice transaction journal shows the collected tax is booking to the Village of Mackinaw Franchise Fee account (incorrect account) and not to the City of Eureka Franchise Fee account (the correct account).

How do I make sure the tax accounts are booking to the correct payable account?  It’s clearly not set correctly at this time.

Where in the Sales Tax Settings section can I correct this?  It looks like the only things I can update are the sales tax rate # and the name of the fee.  I don’t see where I can make sure that the fees collected post to the correct payable account.

Additionally, how can I correct the 200+ invoices that have already been created with the sales tax booked to the wrong sales tax payable account?

I contacted QB Intuit support today, and the representative had a hard time understanding what I attempted to explain to her, and could not offer any resolutions or solutions.  I am so frustrated.  Sales Tax collection worked perfectly for me for the last 8 years but these new settings have really screwed it up.

Please advise.

1 reply

K
Kurt_M
October 4, 2024

We'll provide details and help you correct the posting account for collected sales taxes inside QuickBooks Online (QBO), @LadyM1.

 

You'll need to locate the payable inside the Chart of accounts to review the register and correct the posting account for those collected sales taxes. We'll outline the steps to get you going:

 

  1. Access your QuickBooks Online company.
  2. On the left navigational bar, click the Transactions tab and then select Chart of accounts.
  3. Locate the account where sales taxes are posted.
  4. Click the View register below the Action column. Verify the transactions and then when you're ready, click on them manually.
  5. Select the Edit button and then in the Transfer Funds to field, choose the account where you want to transfer the sales taxes.
  6. Complete the necessary information of the transfer.
  7. Once done, click the Save and new or Save and close button.

 

If you're unsure which category to choose, it's best to work with an accountant. They can help you determine the best way to handle your situation. If you don't have an accountant, I can help you find one. Feel free to visit this page: Find a QuickBooks ProAdvisor.

 

On the other hand, you can refer to these handy articles to help you manage sales tax setting and learn more about sales tax adjustments inside QBO:

 

 

Suppose you have other questions related to QuickBooks or further assistance in correcting the posting account of the collected sales taxes. Feel free to visit us or comment below. Rest assured, our team will always be around to respond as soon as possible. Keep safe.

L
LadyM1Author
October 4, 2024

Kurt,

 

Thank you for your reply, but so far it is not helpful.

I got through part of Step 5 (clicked Edit button), but this leads to the customer invoice and I do not see any “Transfer Funds to” field to transfer the sales taxes.

Moreover, you can see on the attached screenshot that QBO has created many $0.00 transactions for customers who purchased non-taxable services.  These $0.00 transactions should not be showing up AT ALL, and also should not be showing up in the Mackinaw …Payable liability register since those customers are properly registered/located in different towns. ALL my 1600+ October invoices are routing or showing up in Mackinaw Payable and actually NONE of them should show up there as no taxes are collected at all in Mackinaw.

    M
    Maybelle_S
    October 4, 2024

    Let me share some information on how to fix incorrect sales tax in QuickBooks, Lady.

     

    QuickBooks Online (QBO) automatically calculates the total sales tax rate based on your customer's sales tax-exempt status, the location where you sell or where you ship, and your service or product's sales tax category. The total sales tax rates are the sum of state and local rates, including the city, county, and district rates.

     

    Please note that when creating tax rates for Eureka residents in QBO, it's possible you select the wrong agency and associate it with the tax rate. In such cases, it is recommended to make the initial tax rate inactive and create a new tax rate that accurately corresponds to the correct agency.

     

    In the meantime, you can create a journal entry. This will allow you to correct the error and keep your records accurate until you have created and applied the correct tax rate. However, we also suggest that you seek guidance from your accountant to ensure that you are choosing the correct account for the journal entry and that your records remain accurate. 

     

    You can always run a sales tax liability report to see each tax agency, the taxable amount of sales, and the tax owed. Refer to this link for more information: Manage sales tax payments.

     

    See the following article for detailed guidance in filing your sales tax return and recording your tax payments: File your sales tax return and record tax payment.

     

    Additionally, you can visit these resources about handling tax rates and other relevant topics:

     

     

    Tag my name in the comment below if you have other questions about sales tax posted to the wrong accounts payable. I want to ensure you are taken care of.

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