How to add Taxes in Quickbooks Desktop

In this tutorial, we will see whether how we can set up sales tax in QuickBooks desktop.

 

Anyhow, when you install quickbooks, the sales tax tracking feature remains disabled which you need to enable first, to apply sales taxes while creating invoices. So, to enable sales tax feature, go to the “Edit” menu and select “Preferences” and then select “Sales Tax” then under “Company Preferences” tab click this radio button to activate this feature.

Tutorial Instructions:

Now the sales tax feature has been activated and before setting up your taxes, search the current tax rates of your state and local tax authorities and for the purpose of example, lets I search for Nevada tax rates and here you can see the current tax rate of Nevada state but we sure need to find local tax authorities rates too to setup taxes properly, so click on this link and here we have tax rates just select your city and here you can see the broken down sales tax rates. moreover, you can select zip-codes to see the tax rates. Well, sales tax rate for Nevada state is 6.85%, and for Clark county, its 1.525% and for Las Vegas city its 0%.  

Now, lets set-up these rates in quickbooks desktop click on “Add sales tax Item” button and then select “Sales tax item” in the “Type” field and then write your sales tax name, description, Rate , and the tax authority name. well, since we haven’t created the concerned authority profile either we can setup the authority by providing the full profile info or we can just click on “Quick Add”, it will just create that authority as vendor and then click on “OK”.

Now add your County and City tax rates and here you can see that all the three taxes have been added and After adding the individual tax rates, you can even group them by selecting “sales tax Group” and here just name your tax group and then write the description and select all the three tax rates here in this table and then click on “OK” to create a tax group. It will automatically calculate the taxes when you will create your invoice and here you can select your common sales tax item.

Well, if you pay your taxes monthly, quarterly, or annually, you can select that timeframe by clicking on the radio button…. And also you need to tell the QuickBooks whether you are paying your taxes on accrual or cash basis and then click on “OK” and here, its asking to make all the existing customers, inventory and non-inventory items taxable, just click on “OK” since it matches with the current business situation and now quickbooks is letting us know that it needs to close all the open windows to change this preference, Just click on “OK” to setup your taxes.

Now, click on home in the pane to bring your home page back and here you can see that a new icon named “Manage Sales Tax” has been activated.

Anyhow, go to the items and services list to see whether it has been applied to all the inventory items or not. Now just double click on any to go to the edit mood and here a new field named “Tax Code” has appeared and made this item taxable and we can click on it to make it taxable or non-taxable. And here are the sales tax items we have just created.

Anyhow, there is a possibility that you have customers in your customers list who are not taxable, in that scenario, you need to go to the customers profile and make changes accordingly under the “Sales tax Setting” tab.