Use Tax
QB does not handle “Use Tax” at all. (there are two ways to do it in this entry)
Use Tax being the sales tax the company owes on items bought across state lines where no sales tax is paid on the purchase but there is still a requirement to pay that sales tax to the state comptroller, or the sales tax on items withdrawn from inventory and used as demos, samples, and for personal use.
The only way I have found to handle it (relatively easy), is to set up a class “sales tax due” and **remember** to identify transactions with that class. Then just before my quarterly tax payment date I run a class report on that class to get the total of the purchases, demos, samples, and personal use for the period of the sales tax payable requirement .
Outside of QB I use a calculator to determine the sale tax liability on that total, That total is also reported on the sales tax reporting form to the state.
I have an expense account set up titled “sales tax paid”
When I bring up the pay sales tax window I use the adjust sales tax button to enter the new amount of sales tax due, and assign it to the ’sales tax paid’ expense account. Then pay the tax bill.
In the QB forum, DawnSBAServices in Oregon showed us a way to track use tax for items purchased. Purchased is the key word here. Create, if you do not have them, a liability account called something like “Use Tax Due” and an expense account called something like “Use Tax Paid.”When you enter the bill, calculate the amount of tax you should pay on a calculator, then select the “Expenses” tab. On the first line select the “Use Tax Paid” account and enter the amount you calculated. On the second line select the “Use Tax Due” account and enter the same amount as a negative. In the memo block enter the amount of the bill.
When sales tax time rolls around, do a quick report on the account “Use Tax Due”, that will total the amount of use tax you owe, the memo block will list the total of the invoices that the use tax is due for, use a calculator and add them up, this is the amount you report for the value of use tax due.
Bring up pay sales tax, click the adjust button, mark it as an increase, select the tax vendor, and select the “Use Tax Due” account as the adjusting account. Enter the amount of Use tax due, click ok.
Update:
Carrying Dawn’s solution one step further and accounting for inventory items that are withdrawn from inventory and used in the business, I found this way to do it.
Create an expense item called “Use Tax Paid” and point it to the expense account with the same name.
Create an other charge item called “Use Tax Due” and point it the liability account with the same name.
Open the item list and right click on the item, look at the very bottom and write down the avereage cost of the item, you should NOT use the cost in the cost block just below the description block, most times this will be the same but not always, and QB uses the value at the bottom called average cost.
Bring up a sales receipt, select the item and then click in the rate column and enter the average cost figure you wrote down. Mark the item as non-taxable. Then do the calculation and enter the item Use Tax Paid and the amount, then on the next line enter the item Use Tax Due and in the quantity column a negative one and the same amount, and enter the amount of the sale in the memo block. (Invoices and sales receipts will not allow you enter a negative price.)
You could just sell the item at cost to the company and let the sales tax be calculated automatically as sales tax due, but for some reason states want the use tax number seperate. When I talked to the Texas comptroller for sales tax audit department they said they wanted it called out separately and if it wasn’t then during an audit they would have to do the calculations all over even though the result (tax due) is the same and the audit file would show that you were not reporting correctly. I got the impression that having that notation in my file would not be a good thing since it would tend to make them more willing to look at me again in the future. Your choice.
