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Use sales tax items and rates to charge sales tax

About sales tax

QuickBooks uses sales tax items to calculate and add sales tax charges when you make a taxable sale. When you set up a sales tax item, you assign it a sales tax rate and associate it with the tax agency to which you pay the sales tax. Once you've set up sales tax, QuickBooks automatically applies the appropriate sales tax item and rate to the sale of your taxable items. (Note: Taxable status of items and customers is determined by the sales tax codes assigned to them. If an item is taxable, and the customer buying that item is taxable, then the sales tax charge is applied to the sale.) All of the sales tax items you set up can be found in your Item List.

Before you start setting up your sales tax items (you need at least one in order to charge sales tax), you need to know the sales tax requirements for the location where you sell your products and services. Part of your requirements are the applicable sales tax rates for each tax district (a city, county, or state that has a sales tax) in which you sell. You also need to know the tax agency to which you pay the collected sales tax for each of those district taxes.
Examples

  • If you have a sales location where you have only one sales tax rate to charge (for a single tax district), then you can set up a single sales tax item and be done with it.

  • If you have a sales location where you need to charge more than one sales tax rate, for example, both a county and a state tax, then you need to set up two sales tax items, even if both sales taxes are paid to the same tax agency. You then need to combine these two sales tax items as a sales tax group item so that only one sales tax charge is listed on your sales forms.

Important: Sales tax rates and requirements vary depending on your tax district. Check with your tax agency before setting up your sales tax items and rates. We also recommend that you talk with your accountant for assistance in setting up sales tax for your specific business needs. If you don't have an accountant, Intuit can help you find one.

See also

KB ID# H_SALES_TAX_OV_USE_SALES_TAX_ITEMS_AND_RATES
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