Set up your specific agencies, rates, and settings in the Sales Tax Center.

  Note: If you don't see these settings, you may be using Auto Sales Tax feature. See Set up and use Automated Sales Tax for more information.

Add or edit sales tax rates and agencies

To add a tax rate and agency
  1. Select Taxes on the left menu.
  2. Choose Add/edit tax rates and agencies on the right, under the Related Tasks list.
  3. Select New and choose either a single or a combined tax rate.
  4. Enter a name for the tax, the agency you pay, and the percentage for the rate. Use a single rate if you pay just one rate to a single agency.
  5. Select Save.
     
    Tax Agency contains the city and county jurisdictions that you pay then QuickBooks Online provides the calculated amount that you owe to each agency and the due date

Add a combined rate with multiple agencies

If you're required to track sales tax for more than one tax agency, consider setting up a combined tax rate.

For example, you might need to report and pay out sales tax to your city, to your county, and to your state. With a combined tax rate, your customer sees only one tax rate on their sales form, but the Sales Tax Center keeps track and splits out the appropriate amounts for each agency. You can add up to 5 components in a combined tax rate.

To add a combined tax rate:
  1. Select Taxes on the left menu.
  2. Choose Add/edit tax rates and agencies on the right, under the Related Tasks list.
  3. Select Newthen choose Combined tax rate.
  4. Enter a name for the combined rate and the different sales tax requirements.
  5. Choose additional components, if needed.
  6. Select Save.
     
    • The new rate appears in the Sales Tax Rate and Agencies list. You can also now select the new combined rate in forms like invoices.
    • You can view the amounts owed to each agency in the Sales Tax Owed list in the Sales Tax Center or you can view the Sales Tax Liability report.

Edit a tax rate or tax name

You can edit a sales tax rate if you need to make changes to it. You can only edit component rates. To edit a combined rate, make changes to its component rates.

To edit a tax rate
  1. Select Taxes on the left menu.
  2. Choose Add/edit tax rates and agencies on the right, under the Related Tasks list.
  3. Choose the rate that you want to change then select Edit.
  4. Enter the new rate. You can also change the agency name.
  5. Select Save.
     
    QuickBooks Online returns to the Sales Tax Rates and Agencies table and highlights the component rate you changed.
Results in editing a sales tax rate
  • The new rate is available for new transactions only.
  • If you create a new transaction but use dates in the past, the transaction uses the new rate.
  • Once you edit a rate, the earlier rate can no longer be used.
  • Existing transactions that used the earlier rate remain unchanged unless you edit the transaction and specifically select a different sales tax rate.
  • For recurring templates that use the changed component, new transactions created with the template use the new rate. Existing transactions created with the template and the earlier rate remain unchanged.
  • Reports show the data for both rates (before and after) if there are transactions for both the rates in a particular period.
To edit a tax agency's name
  1. Select Taxes on the left menu.
  2. Choose Rename under the agency name that you want to edit.
  3. Enter the new name then select Save.
     
    You can't make changes to the Tax Rate field. If the rate needs to change, deactivate the existing tax name and rate, and then create a new tax with the rate you want.

Configure sales tax settings

To change the Sales Tax Center filter
  1. Select Taxes on the left menu.
  2. From the Start of Year and Accounting Basis drop-down, choose your preferred filter.
     
    For more information regarding the Accounting Basis, please see: Cash vs Accrual accounting and its effect on sales tax.

Edit sales tax settings

You can turn sales tax on or off by editing sales tax settings.

To edit sales tax settings
  1. Select Taxes on the left menu.
  2. Choose Edit sales tax settings on the right, under the Related Tasks list.
  3. Select Yes, if you charge sales tax.
  4. Set the following options(Optional):
    • Set a default tax rate - The default rate is automatically selected in new sales forms. You can choose a different rate if needed. If you choose a different rate for a particular customer, QuickBooks Online remembers the rate for that customer and overrides the default rate.
    • Select Mark all new customers are taxable - This means new customers you add aren't tax-exempt. You can change this setting for individual customers in the Tax Info section of each customer record.
    • Select Mark all new products and services are taxable - This means items you add to a form have the Tax column already selected. You can clear individual items in a form if you don't need to charge sales tax.
  5. Choose No if you don't charge sales tax. If you already charged sales tax on earlier transactions, you won't be able to disable sales tax without first removing sales tax from those earlier transactions.
  6. Select Save.
To deactivate a tax rate
  1. Select Taxes on the left menu.
  2. Choose Add/edit tax rates and agencies on the right, under the Related Tasks list.
  3. Choose a tax rate name and select Deactivate.
  4. Select Continue.
     
    To know how to apply these tax rates to specific transactions, please see: Applying sales tax rates to transactions and sales forms.

    For more details regarding Sales tax in QuickBooks Online, please see: Sales tax in QuickBooks Online

6289