If you live in a state that has sales tax and you purchase items online or from an out of state vendor that does not collect the tax, then you must report and pay this tax to your state. There are several ways to record this in QuickBooks and this is the one I like best:
First, create an Other Current Liability account in your chart of accounts:
- Ctrl+A to quickly open the Chart of Accounts or go to Lists > Chart of Accounts
- Ctrl+N to quickly open the Add New Account window or right click and choose New
- Choose Other Account Type, then Other Current Liability and in the next window name the new account Use Tax Payable
Next, when you receive the bill to enter or are writing a check:
- Fill out the top portion of check/bill form with vendor, bill, and amount due.
- In the bottom portion, select the expense account you are coding the purchase to.
- In the amount column, enter the amount of the bill, then press the * (times) sign on keyboard to bring up the in-field calculator, enter the calculation to increase the amount by the use tax. If your state charges 6% use tax, then enter * 1.06. If your use tax rate is 8%, you would enter *1.08.
- Tab down to the next blank line, enter the Use Tax Payable account.
- The amount column should pre-fill with the difference between the amount you entered in the top portion of check/bill and the amount you entered on the first line. This should be a negative amount, and the amount of the use tax due to your state. If the amount does not pre-fill, enter the use tax amount as a negative (use the = sign to pull up the in-field calculator).
- In the memo column, enter the original amount that you are calculating the use tax on, this is helpful if your state reporting form requests the total purchases subject to use tax.
Finally, if you pay the use tax at the same time and on the same check as you pay sales tax:
- Run a quick report on the Use Tax Payable account for the time period you need. Add up the total purchases subject to use tax as recorded in the memo field if needed for your reporting form.
- Run the Pay Sales Tax routine as you normally would to pay sales tax due. Click on the Adjust button.
- In the Adjust Sales Tax window, choose the Use Tax Payable as the adjustment account, select Increase Sales Tax, and enter the amount due from the quick report.
- After closing this window, you will need to check mark the sales tax line and the adjustment line, then create the payment.
Click the pictures to enlarge.I hope this has helped! I would love to hear from you so leave a comment, ask a question, or just say “Hi”. Please share this or post a review for me: Google or ProAdvisor