Quickbooks and Sales Tax Tracking: What You Should Know
As a business owner, it’s important that you calculate — and charge — sales tax on all purchased products and services. When a customer in your business’s state makes a purchase, you are legally required to charge him or her sales tax. Although different states and municipalities have different sales tax rates, most fall somewhere between 4% and 9%, meaning a customer who spends $100 must pay an additional $4 to $9 in sales tax. There’s no denying the fact that sales tax adds a new challenge for business owners. But if you use Quickbooks, you’ll be pleased to hear that it does most of the work on your behalf.
How Sales Tax Rate Is Calculated in Quickbooks
Quickbooks is able to automatically calculate sales tax based on the region in which your business operates. As previously mentioned, there’s no universal sales tax rate for the United States. Rather, it varies depending on the state, city or county, with most places requiring businesses to charge between 4% and 9%. Quickbooks, however, contains an updated list of thousands of tax code rates for U.S. municipalities. Regardless of where your business operates, Quickbooks can automatically calculate your correct sales tax rate.
Charging Customers Sales Tax in Quickbooks
Of course, you’ll need to charge customers sales tax. While it’s best to consult with a professional tax accountant, businesses in the United States are generally required to charge sales tax for all products or services delivered in their respective state or municipality. If you use Quickbooks, however, you can easily charge customers sales tax by adding it to their invoices. Simply pull up the customer’s invoice, at which point you’ll see an option to add sales tax. And because Quickbooks automatically calculates sales tax rate based on your region, you don’t have to worry about trying to find the correct rate.
The Sales Tax Center
Quickbooks actually has a built-in feature that’s designed specifically for sales tax tracking: the Sales Tax Center. Using this feature, you can analyze and report your business’s sales tax. The Sales Tax Center even allows you to receive notifications for when sales tax is due. As you may know, most states require businesses to pay sales tax four time a year — once per quarter. With notifications enabled, you’ll receive an email before the due date of each quarter so that you don’t accidentally miss a tax payment.
Have anything else that you’d like to add? Let us know in the comments section below!