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Running a small business or being self-employed, it’s never an easy task. Especially, for beginners who are getting started to acquaint themselves with ins and outs of bookkeeping the process of managing finances is quite complicated. Fortunately, QuickBooks’s reporting attributes make it convenient for you to keep track of your business activities. One such important feature that comes with QuickBooks is the ability to keep track of sales tax.

If your business needs to collect sales tax for dealing with certain goods and services, this feature is of immense help.  Managing a sales tax can be challenging. It requires you to put an effective system in place alo To assign an expense accounting with investing considerable time and effort. To cater to all these issues related to sales tax reporting and collection, QuickBooks offers you an effective solution. It lets you maintain proper tax records so that you can easily monitor and keep track of sales tax issues. The QuickBooks dedicated sales tax feature enables business owners to pay the right tax amount to the right authorities at the right time – and that’s something very useful.

Interested to know more? Keep reading.

Tracking Sales Tax in QuickBooks

Sales tax in Quickbooks can be tracked by recording transactions as expenses.  For this, you need to create an Expense account and then select it to monitor tax payments. The process is not automated, as it involves the manual selection of accounts for which you want to track expenses. Thus, the manually added sales tax isn’t available for monitoring on your financial reports.

Furthermore, before you head to set up an account for sales tax tracking keep the following things in mind:-

Before you set up your sales tax, make sure

  • To comply with the law. 
  • To check sales tax requirements for your location as well as the place where you ship your products or services. 
  • Know the right agency to which you need to approach for submission of the collected taxes.

Now let us explore the steps involved in tracking sales tax in QuickBooks.

Step 1: Creating an Expense Account

To assign an account of Expense to sales tax, you need to generate a new account. 

  1. Go to the Lists option and from it select Chart of Accounts
  2. Then, click on the Account button. 
  3. Next, locate and open the New option. A list of account types will be displayed from which you need to select the Expense option. 
  4. After selecting the Expense account, click on the Continue button. 
  5. In the next screen you will get the option to designate a name for the newly created account. 
  6. Enter a name for your expense account to let you keep track of your expenses. Be sure to pick a simple and meaningful name you can easily remember, like “Tax Expenses”. 
  7. After this, choose the Tax Line option, and from the drop-down displayed, select a suitable tax line for your company. In this case, you need to select Sales Tax
  8. At last, click OK to save and then close the window. 

Step 2: Tracking Sales Tax Expense

  1. Create a transaction and open the Expenses tab. 
  2. Click on the Tax Expense to open an account for which you want to track tax expenses. 
  3. Then, enter the sales tax amount in the Amount category. 
  4. Tap on Recalculate and verify that the total appearing is accurate.
  5. Next, open a Tax Expense account to verify and track your taxes paid.

Once completed, you can have a look at the transaction summary of your expense account to check the total amount paid towards taxes.

Final Words

Assigning expense account to sales tax is one of the effective ways to have easy access to your tax records in QuickBooks. It also simplifies the process for your accountant and paves the way for accurate invoicing. Moreover, the option is preferable due to its excellent role in ensuring bookkeeping accuracy and consistency.

Thus, to prevent the need to avoid the risk of potentially inaccurate data in the future, opt for QuickBooks software. The QuickBooks services provide you a gamut of functions to manage and track your expenses, thereby, helping you stay organized during tax seasons.

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