Thursday, September 24, 2009

Using Quickbooks To Track & Pay Sales Tax

QuickBooks software allows for you to track sales tax that is owed. Companies that collect sales taxes are required by law to pay the taxes collected to the appropriate taxing ageny. QuickBooks makes that job easier.

The state of Michigan only has a state sales tax. There is not a county, local or city sales tax. For more information on the tax regulations for the state of Michigan go to http://www.michigan.gov/taxes/0,1607,7-238-43519_43521_44039-5922--,00.html

In order for the sales taxes to be calculated correctly the software has to be set up correctly. Several steps are required in setting up the sales tax information. You must set your company preferences to let the software know you are collecting sales tax.

You also need to complete the following steps.

First you should set up sales tax items. You'll set up your sales tax items with rates and the tax agencies to pay, assign taxable or non-taxable status to your items and customers, and set up a payment schedule.
Second you should enter and opening balance for your sales tax payable account. If you have sales tax that you currently owe to your tax agency, you need to enter that balance in the sales tax payable account where your sales tax is tracked.
Third you should charge sales tax when you make a sale. Once your sales tax information is set up, sales tax is automatically added to your invoice, sales receipt, or other sales forms. QuickBooks does the calculations for you.

The last thing you should do is pay your tax agency. You can run a sales tax liability report to track what you owe, then pay the sales tax when it's due.

Sales tax tracking is just another of the benefits of using QuickBooks to track your company finances. Your accountant should be able to help you further.