Sales Tax Reports / Payments

For clients whose Engagements include the processing of sales tax reports and payments…

Sales Tax projects and due dates should be documented in Financial Cents. Some sales tax reports are due monthly and some are due quarterly. Other schedules are less common but could exist. Verify with new clients what is due and when.

Proper QBO Setup

QBO has come a long way in facilitating our work with Sales Tax. We’ll want to verify with new clients what has or hasn’t been setup correctly for sales tax in QBO, who is responsible for tagging new products as taxable or not, who is responsible for tagging clients as tax exempt or not, verifying shipping addresses are entered correctly for proper application of sales tax at invoicing, and who creates customer invoices. All of these pieces factor into the proper functionality of sales tax in Quickbooks.

Gather Data for Reporting

Compile all information needed to file an accurate sales tax report:

• Confirm all transactions for the time period to be reported on are accepted and coded.
• Compile all sales data (from POS system, QBO (Sales Tax Liability report), client, or other source).
• Review for any new taxing jurisdictions – confirm rate is properly calculating (Client may need to take action to create an account with any new taxing jurisdictions).
• Review Sales Tax Liability Report and verify/confirm sales amounts match P&L income figures and liability amounts match Balance Sheet liability figures as of the applicable date.
• Prepare workpapers if needed to formulate the sales figures into the categories and or sub-totals the sales tax report format(s) will require. Consult prior period reports as needed to confirm how information is to be reported (i.e. specify out-of-state sales, governmental sales, non-taxable sales, etc).
• Send summary of liabilities to be paid to client for approval (if requested).

File Sales Tax Report / Make Payment

Once all data is gathered and verified we can file the reports with the taxing jurisdiction.

• Login to the website for each jurisdiction, enter the data in the form/format required. Double check figures against source documents before submitting. Save a copy of the submitted report on the Google Drive.
• Follow the website process for submitting payments – usually submitted electronically through the website after the report has been submitted. Save payment confirmation to the Google Drive.
• Enter the sales tax payment into QBO. This entry should reduce the sales tax liability account and reduce cash. Some taxing jurisdictions offer discounts that are applied as the report is filed. Be sure to enter any such adjustment to the payment amount in Quickbooks.
• After the payment is posted, verify the sales tax liability account reflects the appropriate activity.

Save All Work

The final step is to make sure we’ve saved everything.

• Save all workpapers, sales tax liability reports, sales tax filing confirmations, and payment confirmations to the client’s Google Drive.
• Send confirmation to the client that sales reports and payments have been made (if required).