When you sell a product or service to a customer, that customer is typically required to pay a sales tax. Each state has its own set tax amount for this purpose. In Alabama, for instance, consumers pay a flat 4% sales tax. In Florida, the rate is even higher at 6% with a total maximum of 7.5% in some areas.
Business owners should set up their invoices to include this sales tax; otherwise, they could find themselves in hot water. Failure to collect sales tax may result in audits and/or corrective actions. Thankfully, the Quickbooks accounting software makes sales tax a breeze. In just a few quick and easy steps, you can set up your invoices to automatically include sales tax using the Quickbooks accounting software. Here’s how you do it.
When you access an invoice generated by Quickbooks, you’ll notice that it has an option for either Taxable or Non-Taxable. Conventional wisdom should lead you to believe that this is where you set the tax for your customers. Assuming the item is taxable, and you’ve marked with the customer with the appropriate tax code, Quickbooks will automatically add the sales tax. Just remember to double-check the Taxable and Non-Taxable field on your invoices, ensuring that “Taxable” is checked. If it’s not checked, Quickbooks will not generate the tax for your customers. But if you check it, Quickbooks will generate the tax.
But now you might be wondering how to set the sales tax code, which requires an entirely different approach. To set the sales tax code, access the Sales Tax Preference window, followed by Taxable or Non-Taxable from the drop-down list (varies depending on the type of tax code you wish to set up), and then <Add New>. Next, enter a 3-digit sales tax code in the New Sales Tax Code Window, along with a description for it. When you are finished, click OK to complete the setup and save your changes. You may repeat these steps to set up any new sales tax codes. Lastly, click Taxable and Non-Taxable drop-down lists once more and choose a default sales tax code for each.
Setting up sales tax is an important step in running a small business. Unfortunately, it’s also something that many small business owners overlook. By following the steps listed here, though, you can set it up using the Quickbooks accounting software.
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