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Collecting and paying sales tax can be complicated for some types of business. For example, a company may have to collect and pay more than one sales tax. Many companies may have a mix of taxable and non-taxable items that are sold. Many also have some customers that are taxable while other customers aren’t. In QuickBooks, you can apply sales tax on selected items for taxable customers during the sales process. It also keeps track of how much you collect, and for whom you are collecting the sales tax. From this information, QuickBooks later helps you to write the check or checks to the appropriate tax agency or agencies when the taxes you have collected are due. However, in order to use QuickBooks to track and pay sales tax, you must perform the following steps listed in the table below.
| What to do: | Description: |
| Set up your taxing agencies, sales tax rates and sales tax groups. | In the Vendor list, you set up the tax agencies to whom you submit the collected taxes. In the QuickBooks Item list, set up the separate tax rates you need to charge for each tax you collect. If needed, you can also create sales tax groups that asses a set of taxes on sales in each district for which you collect and report sales tax. |
| Indicate who and what gets taxed. | In your Item and Customer:Job lists, you indicate which items and customers are taxable or non-taxable. You can then assign sales tax rates or sales tax groups to your taxable customers. |
| Apply tax to taxable sales. | When you create an invoice or sales receipt that includes taxable items for a taxable customer, QuickBooks calculates, collects and tracks the sales tax automatically. |
| Find out what you owe. | As you record taxable sales, QuickBooks keeps track of the taxes you’ve collected in your Sales Tax Payable account. When you’re ready to pay your sales tax agency, you can open the Sales Tax Payable register to see how much you owe, or you can create a sales tax liability report. |
| Pay your tax agencies. | In the “Pay Sales Tax” window, QuickBooks shows the sales tax owed and writes the check or checks to the tax agency or agencies for the amount or amounts collected. |
Check out this video that helps outline the sales tax process:
