Setting up

Turning on Sales Tax starts with File|Preferences|Sales Tax , bringing down the dialog box. The view is from QuickBooks 4.0. QuickBooks 5.0 accepts the same selections in a larger window.

Do You ... actually means “Do you collect sales tax from any of your customers?” This switch is required to activate sales tax. Each individual customer may be set up as taxable or not, and any one invoice can be a special case.

I pay sales tax ... effectively sets up defaults for the Pay Sales Tax function, so that you can conform to your state law.

I owe sales tax ... allows selection cash or accrual method of tax accounting. Accrual basis means you owe tax when you invoice the customer; cash means you owe the tax when you receive payment.

Most common sales tax provides a default tax to be inserted for new customers. This requires a sales tax item, which may have been set up during the new company interview. If not, this entry must be deferred.

Mark taxable amounts with “T” when printing? Invoices (and other sales documents) can be XE "T:on taxable items" printed with a “T” to the right of taxable item amounts. This adds clarity for some people, and annoyance for others. The choice is about printing. The display always shows the “T” on taxable items.

When each entry matches your situation, click OK.

Vendors for sales tax? Yes. Governments provide services such as flood control, building and zoning code enforcement, and XE "vendor:sales tax" parks, and they collect taxes. Because the Sales Tax Payable account is a form of accounts payable, QuickBooks classifies the tax agencies as vendors. This name will go onto the Pay Sales Tax checks, which means you need a vendor name for each agency to whom you pay sales tax. The setup is generally as for other vendors (Chapter 6) except type will always be Tax Agency.