Effortlessly Create a Sale Tax Invoice Format for Operations

Sale tax invoice format for Operations

in this video we're going to talk about sales taxs in QuickBooks online so I have a brand new QuickBooks Online file I'm going to go to new invoice just to show you that there's no sales tax being calculated here as a matter of fact there's a button here that says setup that's one way to get started you can click on setup and go through the setup process via this screen or if you don't have an invoice open you could also click on where it says taxes on the left navigation bar click on taxes and then go to where says um sales tax so taxes sales tax you open that up and the very first screen should say something like use automatic sales stocks some people are still in the old sales stock system which is going to look different than in this page I'm going to be showing you only the sort of this new automated sales talk system then we're going to put the address you want to put the address of your of your business the address of um where your headquarters is per se and you're going to hit next then it's going to ask you what states do you have um tax agency with right now I'm only going to put Florida for now because I'm not going to use multiple but we can do examples of multiple in a little bit then I'm going to click on the drop- down menu and I'm going to select let's say monthly now depending on how much sales tax you collect depending on your state as well and sometimes depending even on the counties you might have different uh frequencies this is something you need to ask either your CPA or you might need to contact your local sales tax agency to figure out based on your business and how much sales tax you're collecting what you're supposed to be doing I'm going to hit next and then it says do you need to collect sales tax anywhere for now I'm going to hit no and then hit next so then it tells me okay we're good to go we're going to set up Florida Department of Revenue for monthly sales tax we click on finish then we click on take a look and now it shows that I have zero sales tax liability for January of 2024 I can click on the drop down menu menu and choose the multiple jurisdictions or agencies that I have I can click on X here and then I'm going to scroll down so you can see all the accumulated for the multiple months and you can even see what the sales tax return will look like now you also have a button here that says sales tax settings if you click on that you get to see uh all the different tax agencies you have and then you can edit so if you made a mistake and um and you want to set up a different frequency starting at different date you can do that you can also select whether or not that state or that agency requires you to file sales tax in a cruel or cash basis that's going to be different by state it's going to vary vary by state Florida happens to be AC cruel so that's why we have that in there so this is this has nothing to do with how you file income taxes this is the treatment of sales for sales tax purposes okay then we also have custom rates things that are not part of the automated system so for example if there's some very specific rate that you get on your County or some special tax that gets paid to the same agency um however it's um Hospitality tax or something like that something different than sales tax you can create your own single or combined rates in here under customer you might need to go back and do that depending on the type of sales tax requirement that your business has and your state and or even the agencies that you have Nexus with okay so now that's set up there's really nothing else we need to do there now we're going to start creating invo so I'm going to go to new I'm going to go to invoice I'm going to just backtrack this to um December of last year that way it starts accumulating for uh future years I'm going to pick a customer here I'm going to go down and pick uh choose an item or add some billable items it really doesn't matter which uh which route we go to I'm just going to add an item here and let's say this is uh $500 or $5,000 now if I don't check taxable it won't calculate tax tax actually have to click on the little check box and and make it taxable for it to become uh something that's taxable now generally Services generally services are not taxable but products are so this is why QuickBooks doesn't default that as taxable we're going to click on the drop down menu click on add new and then I'll create like some products okay so let me do non-inventory and let's put here wires or something like that and then I'm going to go down here and says where it says hey is this taxable what kind of sales taxes would this product have and you have to make sure you configure your individual products to be tied to a particular sales tax rate so I'm going to click on edit sales tax right there edit sales tax click on that and then I want to tell it what type of product it is so I'm going to type wires see if if there's anything like this no let me type cables okay nothing like that let's put Electronics okay nothing like that it becomes kind of kind of hard to find specific things let's scroll down and see what we got here here retail maybe let's do that taxable retail items we'll pick that okay and then we'll make this taxable and then click on done okay that should just work and then I'll just do my regular uh configuration for my items okay perfect okay so there's my item wires is set up for the standard taxable rate let me click on Save and close and then we'll let's say we sold 17 of these for $10 each so essentially on these right here we should have sales stack calculated now the problem is my customer doesn't have an address yet and then QuickBooks is very address Centric so if until I have an address this is just not going to calculate any sales tax when I click on edit tax it says right here that um that we don't have the location and address that's kind of the problem okay so um do we collect sales tax with this agency yes we do do so hit save and close and just make sure that works and I'm going to close that and then now it's set up for 11.90 which is going to calculate only on the $170 that's taxable if I click on the the check box for taxable for services it just won't work it won't let me do that because that item is not set up to be to be taxable only wires is set up to be taxable and if I click on this little check box to turn it off it won't calculate any sales tax so I'll check on that one more time and then I'll click on the drop down menu and do uh save and close there you go invoice has been saved okay so that's it just have one invoice and one sales tax liability if I scroll down and go go tax period and click on last month we're going to see here that we have $11.90 all the way in the bottom which is our tax liability it says it's overdue okay so because that was due um around the 20th and I'm recording this on the 29th and that's accurate that's supposed to that's that's supposed to be what it's doing I'm going to click on view tax return so we can see what that would look like we click on that and it's going to basically show me what the tax return should look like now this is not a tax return you still have to fill out the tax return on your State website there's a very specific sales tax return you will fill out specifically like the the the one in the Florida is called dr15 that's what it's called in Florida every State's going to have his own thing this is actually what the sales tax return looks like and you're going to have to fill out all the numbers from the QuickBooks tax return into the actual real tax return so in this case we'll we'll do uh gross sales which is 5170 that will translate into gross sales um in this um column one in U your know sales services or actually um in this number one box then exemp sales would be we go back here all the sales are non- taxable which is the 5,000 then the taxable sales would will be the 170 so we're back here we have taxable sales 170 and then tax due is going to be this uh 10.20 now the way it works in Florida and this could be different in every state uh there's actually a backside where you add the extra 1% of of tax so it's just it's kind of funky in every state on how these things are um are calculated but essentially the combined State 6% plus a county 1% the combination the 1190 is uh the that you pay tax now in Florida if you pay early you actually take um you get a credit okay you get a credit for uh basically that's how the state pays you for helping them collect so then what you would do is you click on ADD adjustment and let's say you're getting I don't know $5 credit so we're going to put Credit in this account and we'll put here uh the account so there would be an account called sales tax credits or something like that you actually have to create an account like that which actually don't happen to have in my Quickbooks file F I'm just going to pick this one right here but there should be an income account called sales tax credits I usually do other income called sales tax credits and then on their amount that's the discount that we're getting or the credit and click on ADD so essentially what you will be paying the state it's uh six .90 and in your sales tax return this thing should add up all the way down to amount due with return $6.90 that's kind of like uh the mechanics of how this works so you got the taxable stuff the non- taxable stuff and then the total uh sales tax in the bottom and then when I click on view uh liability report you actually get this in a report form okay and this is uh for a single uh state in this particular case I'm going to go back here for a second and go look at that return one more time let's go down here to last month let's view the return again and right here where it says record payment when you actually pay pay the state which will probably be electronically or via check and how you do it you're going to click on record payment and you're going to enter the same exact payment that you made them QuickBooks will not pay your state directly this functionality is not built into QuickBooks yet you still have to do a separate tax return and file it and you still have to make the payment separately electronically a via check and pay the state directly and then after you you pay them you go back into QuickBooks and go yep I use this bank account to pay them it was with a check or whatever and click on record payment and then you put it into the books that you pay them so if you actually go back and look at the balance sheet so let's go run a report and let's go look at a balance sheet and then I'm going to look a balance sheet for last month which is going to be for December and click on run report I should have a liability here for Florida Department of Revenue payable sales tax for $11.90 but if I put this um this balance sheet for today's date and click on run report that liability should disappear it's now zero because I've already recorded the payment now let's do um some examples of sort of multiple State situations so let's go back into taxes and sales tax and let's create a new jurisdiction so let's go into uh sales tack settings and then we're going to click on ADD agency and then we're going to add California here so let's add California I'm going to add the whole state and let's say I pay them quarterly and then uh start date let's say is going to be uh January 29th that's fine and the method will be a cash so I'm going to show you kind of the difference and by the way I don't know if Florida has cash bases so I have to kind of explain that piece as well so we'll click on Save and then now we have California setup and then we the only way QuickBooks will know if the sales tack that goes to that customer is in California is based on their on their address so I'm going to go to new invoice I'm going to pick again the same customer as before customer a and then I'm going to pick a the the same wires account the wires item let's put 50 of them for $14 a pop they're taxable is 49 bucks if I click on edit tax this is calculating Florida Tax it's not calculating California tax and the reason for that is because it doesn't know that this customer is in California if I click on um location address and click on edit this is the where I'm shipping from but then we have shipping too so in here I can put 101 Main Street um Los Angeles California 90210 okay and I click on Save and then it says okay this is Florida um tax and fee Administration do you collect sales tax for here so I'm going to hit yes I do collect sales tax for there click on Save and close and now this is going to uh calculate an entirely different tax entirely different structure right this is 99.5% not 7% and it has three different jurisdictions that is hitting QuickBooks will do all this and then we're going to come back down here click on close and then notice my sales tax is now $66.50 it's no longer $49 because it's an entirely different calculation if I um click on edit tax we can go back and see what that is and something you can do is click on override this amount and then put the specific amount that you want to charge for sales stocks don't recommend you ever do this okay because you're going you're going to throw the whole system um you're going to make a huge mess on your sales Stacks but if for whatever reason for some Advanced reason that you don't understand and are very conscious about you can actually override and say you know what this one's actually supposed to be 10% so I'm going to overwrite this and for whatever reason I'll just put here you know whatever the overwrite reason is click on apply override click on close and now it's going to charge actually 10% if I click on edit tax one more time I can click on reset recommend the value so I made a mistake I shouldn't have overwrite it click on that click on close and then QuickBooks puts it back to where supposed to go that's how QuickBooks knows about this so let's let's click on save and close let's get out of this one let's do a new invoice let's go new invoice and now I'm going to pick a different customer let's pick this customer here and then let's say this one I'm going to put the address here so 5,000 um Garcia Avenue I don't even know that's a real uh Street uh L let's do uh Mountain View California let's say I don't even know I don't even know the the ZIP code on that so let me S select the item let's see how good QuickBooks is as at catching potentially uh something like this okay so let's see so now this is using 1643 let me click on edit tax yeah so this one it it figure it figured it out it figured this one out even when I click on edit see it actually did figure out that this was in California and is Santa Clara County which is really interesting and then we click on close and then we have its own separate entire calculation for sales tax so let let's get out of that and let's X out and let's go look at uh the reports so let's go back into uh sales tax and let's go down and see what our California return is looking like let's go to more details so right now California says zero and the reason for that is because I said California is Cash bases let's see what happens let's go to new let's go to receive payment and let's receive payment for I guess was this one that was yeah that was there we go let's receive that payment click on Save and close so now we have um only based on cash basis let's go back to the sales tax Center and now yep there it is $16.43 is being accumulated in in cash basis um only and if I receive the payment on the other invoice uh let's go here customer a let's just receive both of those payments in theory the other 6650 for sales should be added here and there we go so we click on the drop down menu and here we go taxable sales grow sales sales tax Ed and that sales tax return that's here that's only for for um for Florida change this to California there we go so here's my California down here in the bottom there's my California Sal STX return let's go to view return and then we we should get the same uh type of information in here okay so we have our our gross sales everything is taxable in this case every single invoice that we created is taxable then the sales tax amount and this is the exact amount that we would owe to the to the state when we finish there's a lot more stuff that has to do with sales tax you know there's a lot of a Nuance uh like some states charge a particular uh sales tax for sales up to a certain dollar amount and then after a certain dollar amount they don't charge you know s charges so that gets a little tricky um you also have the the combined sales tax situations or the or the custom sales tax situations that we that we discuss briefly at the beginning and then we also have the the issues of economic Nexus economic Nexus is deciding which states you have Nexus with and essentially there's um here's a basically a summary of all the states and you are going to go in there and choose which states you have Nexus with but technically um the the Nexus is based on how much sales for a whole year or you have or sometimes it's for a whole month in that specific State and that specific state has other qualifications that will force you to have Nexus which means you have to report sales tax in that states that's more of a question you need to ask to a CPA that knows sales tax in that particular state so hopefully that's helpful and you kind of know how to navigate sales tax from here thank you I'll see you in the next one