Tracking use tax in QuickBooks


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Find out how to track purchases subject to use tax in QuickBooks. I have created a simple tutorial that is effective and easy to follow.

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Tracking use tax in QuickBooks

  1. 1. TRACKING USE TAX INQUICKBOOKSTips and tools for tracking use tax inQuickBooks. By Jo Tsai Cherniss
  2. 2. What is use tax? When you make a retail purchase,Use tax is a tax on the you usually pay sales tax to theuse of goods or seller, who in turn pays it to the State. However, there are instancescertain services in when sales tax is not paid onmost States, when purchases, and in many of these situations, use tax is due.State sales tax has For example, State of Californianot been paid. states that “the use, storage, or other consumption of those same kinds of items in California .” There is no one rule that applies to all states, so be sure you are familiar with the rules in your particular State (contact your state’s Department of Revenue).
  3. 3. Step 1: Prepare Create an account titled “Use Tax Payable”  Thisis an Other Current Liability Account in QuickBooks.
  4. 4. Step 2: RecordEnter thePurchasewith thesales taxcalculated,then deductthe sales taxand record itunder “SalesTaxPayable.”
  5. 5. Step 3: Generate/Review Report
  6. 6. Step 4: Adjust Taxes Due 1. Enter the Adjustment 1 Date 2. Enter Sales Tax Vendor 2 (the government agency 3 that collects sales tax). 4 3. Assign Use Tax Payable 5 in the Adjustment Account 4. Increase Sales Tax 5. Enter increase amount
  7. 7. Step 5: Make Payment  Go to Vendors>Pay Sales Tax>Manage Sales Tax  Click Pay Sales Tax button
  8. 8. Bonus: Tracking Tax Credit EXAMPLE for State ofFive Step Process CaliforniaStep 1: Prepare = Tax at SourceStep 2: Enter as it happens = Tax District & Price inStep 3: Generate report MemoStep 4: Adjust tax payment = Sort by MemoStep 5: Render payment = Decrease Taxes OwedThe five steps process may also beused to track tax credits onQuickBooks.
  9. 9. Resources: State Departments ofRevenueLinks to State Departments of RevenueCalifornia Florida Kentucky Montana Ohio UtahAlabama Georgia Louisiana Nebraska Oklahoma VermontAlaska Guam Maine Nevada Oregon Virginia NewArizona Hawaii Maryland Pennsylvania Washington Hampshire MassachusettArkansas Idaho New Jersey Rhode Island West Virginia s SouthColorado Illinois Michigan New Mexico Wisconsin CarolinaConnecticut Indiana Minnesota New York South Dakota Wyoming NorthDelaware Iowa Mississippi Tennessee CarolinaDistrict ofColumbia Kansas Missouri North Dakota Texas(WashingtonDC)
  10. 10. THANK YOU  424.229.2719 westwood | manhattan beach jo@myquickbookkeeper.comTracking Use Tax in QuickBooks. 2011 Jo Tsai Cherniss. All Rights Reserved.