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How to: Set up Sales Taxes with QuickBooks Desktop

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IMPORTANT: There are several different options for mapping data from ShippingEasy to QuickBooks.  Before using the ShippingEasy integration with QuickBooks, back up your QuickBooks company file.

Configuring Quickbooks Desktop to calculate sales taxes gives users the advantage of knowing exactly how much sales tax is owed for their business. This option can be particularly useful for single store owners who collect taxes in one or two regions.

Online stores already configured to calculate sales taxes correctly might be better off not using the calculation feature from QuickBooks Desktop because it can be difficult to manage if you must collect a variety of different taxes in different cities, counties, and tax districts.

ShippingEasy's QuickBooks Desktop integration supports either approach. Follow the instructions below for the approach that you use.

QuickBooks Desktop Calculates Sales Tax

If you are only required to collect one tax rate, for example in a single US state in which you do business, then configuring QuickBooks Desktop to calculate sales taxes is simple. You have to enable sales taxes in QuickBooks and then define a QuickBooks Desktop Sales Tax Item or Sales Tax Group - this article provides detailed steps.

From there, the ShippingEasy integration for QuickBooks Desktop allows you to map your QuickBooks Sales Tax Items and/or Sales Tax Groups to one or more specific US states. When the integration creates a new Customer in QuickBooks, the integration tells QuickBooks to use the correct Sales Tax Item or Sales Tax Group based on the billing address in the order.

Important: QuickBooks cannot accurately calculate sales taxes if you are using ShippingEasy's feature for mapping all of a store's transactions to a single QuickBooks customer.

Next,when the integration creates a sales transaction in QuickBooks Desktop for that new customer, QuickBooks calculates the appropriate sales tax amount. This example transaction had sales tax calculated by QuickBooks:

This approach allows you to use the reports in QuickBooks Desktop to calculate how much you owe for each type of sales tax. To do so, you have to define and maintain the Sales Tax Items (and/or Sales Tax Groups) in QuickBooks and verify that the sales tax calculated by QuickBooks matches the amount calculated by your store(s).

To configure the ShippingEasy QuickBooks Desktop integration to use this approach, follow these steps:

  1. Select Setup > QuickBooks



  2. Check the box to Enable Tax Handling



  3. Click Configure Taxes...


  4. Select the QuickBooks codes for taxable and non-taxable Items:



    These selections control how the integration creates line items in the sales transactions (receipts or invoices) that the integration creates. If the order from ShippingEasy indicates that any sales tax was charged, then the integration will create line items with the tax code selected for taxable items. If the order from ShippingEasy indicates that no sales tax was charged, then the integration will create line items with the tax code for non-taxable items.

  5. In the Tax Calculation section, select the QuickBooks calculates option:



  6. In the State Taxes section, click the Add button to add a mapping from your customer's shipping address state to a Sales Tax Item or Sales Tax Group in QuickBooks:



    For example, if your customers who have a shipping address in Texas should always be charged the rate that you defined in QuickBooks with a Sales Tax Item called "State of Texas Sales Tax" select it:



    The mappings that you create in the State Taxes section are used to control how the integration creates Customers in QuickBooks. If the customer's shipping address is in a state for which a tax has been specified, then that tax will be used by the integration when creating the Customer. You can configure a list that maps states to QuickBooks Tax Items or QuickBooks Tax Groups. There are a collection of buttons labeled “Add, Edit, Remove, and Remove All” that can be used to manage the list.

    Click the OK button to save your state mappings.

  7. Click the Done button to save your selections.

 

Use the Sales Tax Calculated by Your Store(s)

If your store(s) accurately calculates sales tax and includes that information in the order data that it sends to ShippingEasy, then you can configure the integration to enter that sales tax amount as a distinct line item in your QuickBooks Desktop transactions. 

This example transaction had sales tax entered as a distinct line item when the ShippingEasy integration created the transaction in QuickBooks Desktop:

Note: the integration enters the line items as non-taxable which then causes QuickBooks Desktop to calculate its tax amount as $0.00. This way the transaction will show the correct total amount in QuickBooks.

The advantage of this approach is only one system is calculating sales taxes: your store. The disadvantage is that you will not be able to use the reports in QuickBooks Desktop that list how much money you owe for each specific type of tax.

To configure the ShippingEasy QuickBooks Desktop integration to use this approach, follow these steps:

  1. Select Setup > QuickBooks



  2. Check the box to Enable Tax Handling



  3. Click Configure Taxes... 



  4. Select the QuickBooks codes for taxable and non-taxable Items:



  5. In the Tax Calculation section, select the Always use tax from my store option:



  6. In the Tax Calculation section, select a QuickBooks Item to use for recording the sales tax that was calculated by your store. Of the different QuickBooks Item types, the integration will list all Items that are of type:

    Service Item
    Other Charge Item

    Select the appropriate Item:



  7. Click the Done button to save your selections.

Related articles:

Overview: QuickBooks Desktop integration
How to: Sync data from ShippingEasy to QuickBooks Desktop
Who pays for the duties or taxes that may be applicable at the destination country?

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