1. McGraw-Hill/Irwin Introduction to QuickBooks Pro, 2004 © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 7 Sales Tax

2. Chapter 7 Textbook page ref. 2 Objectives 1. Activate and Set Sales Tax Preferences 2. Use Sales Tax Items on Sales Forms 3. Set up Sales Tax Items 4. Use Sales Tax Codes on Sales Forms 5. Set up Sales Tax Codes 6. Assign Sales Tax Codes to Items 7. Assign Sales Tax Codes to Customers 8. Use QuickBooks reports to assist in preparing your sales tax return 9. Adjust Sales Tax Payable 10. Pay Sales Tax 11. Set up and use Sales Tax Groups 12. Categorize Revenue by Sales Tax Code 309

3. Chapter 7 3 Objective 1. Activate and Set Sales Tax Preferences

4. Chapter 7 Textbook page ref. 4 Activating Sales Tax and Setting Preferences You must set up your Sales Tax Preferences before using the Sales Tax feature in QuickBooks  Select the Edit menu and then select Preferences.  Scroll to and select Sales Tax and then click the Company Preferences tab 310

5. Chapter 7 5 Objective 2. Use Sales Tax Items on Sales Forms

6. Chapter 7 Textbook page ref. 6 Using Sales Tax Items on Sales Forms The Sales Tax Item calculates the tax for this sale 313

7. Chapter 7 7 Objective 3. Set up Sales Tax Items

8. Chapter 7 Textbook page ref. 8 Setting Up Sales Tax Items Select the Lists menu and then select Item List 313

9. Chapter 7 9 Objective 4. Use Sales Tax Codes on Sales Forms

10. Chapter 7 Textbook page ref. 10 Using Sales Tax Codes on Sales Forms 1. This Tax Sales Tax Code shows the 104- Slider Inventory Part is a taxable item 2. This Tax Sales Tax Code indicates Bill Young is a taxable customer, so taxable items on this invoice will be used to calculate and charge sales tax 316

11. Chapter 7 11 Objective 5. Set up Sales Tax Codes

12. Chapter 7 Textbook page ref. 12 Setting up Sales Tax Codes 1. Sales Tax Codes serve two purposes  First, Sales Tax Codes indicate whether a specific product or service is taxable or non-taxable  Secondly, Sales Tax Codes categorize revenue based on the reason you charged or didn’t charge sales tax 2. To set up a Sales Tax Code  From the Lists menu select Sales Tax Code List 316

13. Chapter 7 13 Objective 6. Assign Sales Tax Codes to Items

14. Chapter 7 Textbook page ref. 14 Assigning Sales Tax Codes to Items Edit the Sales Tax Code on each Item 317

15. Chapter 7 15 Objective 7. Assign Sales Tax Codes to Customers

16. Chapter 7 Textbook page ref. 16 Assigning Sales Tax Codes to Customers Enter the appropriate Sales Tax Code and Sales Tax Item in the Sales Tax Information section 319

17. Chapter 7 17 Objective 8. Use QuickBooks reports to assist in preparing your sales tax return

18. Chapter 7 Textbook page ref. 18 QuickBooks and Your Sales Tax Return 1. The Sales Tax Liability report provides you with the information you need to prepare your sales tax return, including a breakdown of sales and sales tax collected by county and sales tax agency 2. The amount of sales tax you owe on the sales tax return will often not match the amount accrued in QuickBooks for several reasons :  Some sales tax agencies require you to round sales tax to the nearest dollar when preparing the return.  Many sales tax agencies offer discounts for timely filing.  Many sales tax agencies charge interest and penalties for filing late. Though interest and penalties are often paid separately, many agencies provide an option for including them with the return. 3. While you are preparing your sales tax return, you may need to create a Sales Tax Adjustment, if so, create the adjustment before you record the sales tax payment so that QuickBooks will show the correct amount to pay 321

19. Chapter 7 Textbook page ref. 19 The Sales Tax Liability Report 321

20. Chapter 7 20 Objective 9. Adjust Sales Tax Payable

21. Chapter 7 Textbook page ref. 21 Recording Discounts, Penalties, Interest and Rounding 1. Some sales tax agencies require you to round sales tax to the nearest dollar when preparing the return 2. Many sales tax agencies offer discounts for timely filing 3. Many sales tax agencies charge interest and penalties for filing late. Though interest and penalties are often paid separately, many agencies provide an option for including them with the return 4. Select the Vendors menu, then select Sales Tax, and then select Adjust Sales Tax Due 322

22. Chapter 7 22 Objective 10. Pay Sales Tax

23. Chapter 7 Textbook page ref. 23 Paying Sales Tax 1. After you prepare your sales tax return and make necessary adjustments for discounts, interest, penalties, or rounding, create a sales tax payment for the amount you owe 2. When you pay your sales tax, don’t use the Write Checks window because the payment won’t affect the Sales Tax Items 3. It also won’t show properly on the Sales Tax Liability reports 4. To correctly pay your sales tax liability, use the Pay Sales Tax window 325

24. Chapter 7 24 Objective 11. Set up and use Sales Tax Groups

25. Chapter 7 Textbook page ref. 25 Sales Tax Groups 1. In many states, multiple sales taxes must be collected and paid to separate agencies 2. Sales Tax Group Items allow you to  Combine multiple Sales Tax Items together so that each city, district, county, and state tax is tracked separately, while only the combined rate of all the Sales Tax Items shows on sales forms 327

26. Chapter 7 Textbook page ref. 26 Setting up Sales Tax Group Items 1. Create separate Sales Tax Items for the county and the state 2. Then create a Sales Tax Group using the county and state tax items 327

27. Chapter 7 27 Objective 12. Categorize Revenue by Sales Tax Code

28. Chapter 7 Textbook page ref. 28 Categorizing Revenue Based on Sales Tax Codes QuickBooks provides a breakdown of revenue by Sales Tax Code on the Sales Tax Revenue Summary report 329 To get a detailed breakdown of non- taxable sales, use more Sales Tax Codes.

29. Chapter 7 Textbook page ref. 29 Summary of Key Points 1. Activate and Set Sales Tax Preferences 2. Use Sales Tax Items on Sales Forms 3. Set up Sales Tax Items 4. Use Sales Tax Codes on Sales Forms 5. Set up Sales Tax Codes 6. Assign Sales Tax Codes to Items 7. Assign Sales Tax Codes to Customers 8. Use QuickBooks reports to assist in preparing your sales tax return 9. Adjust Sales Tax Payable 10. Pay Sales Tax 11. Set up and use Sales Tax Groups 12. Categorize Revenue by Sales Tax Code 331