Set Up a Sales Tax Item in QuickBooks
If your business collects sales tax, you must set up your sales tax preferences in QuickBooks. QuickBooks uses the Sales Tax Items to calculate the Tax field at the bottom of sales forms and to prepare reports for tax authorities. When you enable sales tax in the Preferences dialog, the first step is to specify the most common sales tax, which means you must create a sales tax item in QuickBooks. To do this:
- Choose Edit | Preferences from the QuickBooks menu bar.
- Click the Sales Tax icon on the left pane and click the Company Preferences tab.
- Click the Yes radio button in answer to the question Do You Charge Sales Tax.
- In the Set Up Sales Tax Item section, click the button labeled Add Sales Tax Item to open the New Item window. Sales Tax Item will be preselected in the Type drop-down list.
- Enter a name for the sales tax. [You can make it descriptive. For instance, use your state abbreviation if your state has a single sales tax structure.]
- QuickBooks has an optional space for more information in the Description section for this sales tax.
- Enter the sales tax rate.
- Select the Tax Agency That You Collect For using the drop-down list if you have already created a vendor for the tax agency. If the vendor does not yet exist, select <Add New> from the drop-down list and add the tax agency to your vendor list.
- Click OK to return to the Sales Tax Preference dialog.
- When QuickBooks asks if it should configure all of your existing customers, non-inventory items and inventory items as Taxable, say Yes if most of your customers and items are taxable.