Strategies for Assigning Sales Tax to Online Store Orders in QuickBooks

For most online store owners, calculating sales taxes for their orders is relatively straightforward. All shopping cart software and/or services offer mechanisms to calculate the taxes and include it in the amount charged to the customer. When it comes to exporting online orders to QuickBooks, however, you are faced with the problem that QuickBooks also is designed to calculate sales taxes on sales receipts or invoices. There are a couple of strategies for dealing with this issue to avoid duplication of sales taxes in your QuickBooks transactions.

The QuickBooks Native Approach
Natively, QuickBooks allows you to set a “Tax Reference Item” for each transaction. This tax reference item appears on your item list as an item of type “Sales Tax” and has a rate associated with it. You can have multiple Sales Tax items set up with different rates that would apply to different customers. Typically this means you have one Sales Tax item for in-state, taxable purchases and another one for out-of-state and/or otherwise non-taxable purchases. You simply set the appropriate tax rate for each transaction and let QuickBooks calculate the taxes.

Imposing the Tax Amount
In some cases, the QuickBooks tax calculation may not offer all the capabilities required for recording your transactions. For example, if you have one tax rate for food items and another for non-food items, QuickBooks will not be able to assign a different tax rate to different items in the transaction. There also may be other reasons that QuickBooks is not able to identically match the taxes calculated by your shopping cart. In these cases, or just to make sure that there is not a disconnect between the QuickBooks and shopping cart tax amounts, you can impose a tax amount for the order. To do this, you will need to create two Sales Tax items, both with the tax rate set to 0%. Use one of them as the tax reference item – you could make this a decriptive one, such as “Shopping Cart Taxes”. Then in the line items of the transaction add the other sales tax item as an item in the order and set the price to the correct tax rate

Tools to Help You Export Online Orders to QuickBooks
SuperManager is a desktop application that can connect to your online store, download orders and export them to QuickBooks. It is capable of using either of the methods above for exporting your orders to QuickBooks. Stop wasting your valuable time re-entering all your online orders to QuickBooks and start your free trial today!

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