Setting Up Sales Tax in QuickBooks Online

Setting Up Sales Tax in QuickBooks Online

Setting Up Sales Tax in QuickBooks Online

Sales tax is one of the more complicated concepts supported by QuickBooks Online.

QuickBooks Online was designed for you, the small businessperson. You’ve probably discovered that many of its features are fairly easy to use from the start.

But just because QuickBooks Online can do something doesn’t mean you should attempt it on your own. Sales tax is one of those things. Depending on your geographical location, you may have to charge not only state sales tax, but also county and city/municipality taxes (and sometimes special taxes). If you’re selling products or services to customers in other states, your situation can get very complicated.

We’ll show you some of the mechanics involved, but we strongly recommend that you let us help you with this.

Setting Up Sales Tax

We’ll describe the process of setting up sales tax rates so you can see how it will work. Click the Taxes link in the toolbar. The new screen should open to the Sales Tax Center; if it doesn’t, click its link in the toolbar above. In the right vertical pane, under Related Tasks, click Add/edit tax rates and agencies. Then click New to open this window:

You can define either a Single tax rate or Combined tax rate in this window.

You’d enter the Tax name, Agency name, and Rate in the designated fields if you’re just creating a Single tax rate. In some cases, you may have to enter a Combined tax rate. If so, click the button in front of that label. The window that opens contains fields that are similar to the ones in the above image, except that Tax name is replaced by Component name. You’ll choose this option when you have to record individual elements of the tax separately. For example, Ft. Myers | Lee County| Florida State.

To muddy things up even more, some items in some situations are exempt from sales tax.

Questions about the Combined tax rate? Contact us.

When you’re done, click Save. You’ll see the tax you just created in a table in the window that opens. To define a New tax, Edit an existing one, or Deactivate one in the list, click the appropriate button. If you’ve entered all you’ll need for now, click Return to Sales Tax Owed and Recent Payments.

Your Responsibilities

Once you’ve set up all the sales tax rates required for you, QuickBooks Online will calculate them for you in transactions where they need to be collected. You can see the running tally in the Sales Tax Center, but it’s up to you to create and record payments on the prescribed schedule. You can also run related reports here.

The site bases its calculations on three things:

  • The state(s) where you have obtained a sales tax permit(s),
  • Your company’s physical location, and,
  • The customer address on the sales form.

But QuickBooks Online can’t know the exact tax situation for all its users. You have to do some detective work before you even approach us for help setting up sales taxes. You’ll need to know, for example, whether your state taxes the products or services you sell. Also, what’s the sales tax rate(s) for the affected states? What agency collects it? When are the payments you’ve collected from your customers due?

Your state government’s website should cover all of this.

Sales Tax Settings

Before you start working with sales tax, you’ll also need to make sure your settings are correct. Go back to the Sales Tax Center and click Edit tax settings on the right side of the screen to open this window:

To save time, QuickBooks Online lets you set some default sales tax actions.

Click the button in front of Yes after Do you charge sales tax? if it’s not already selected. If most of your transactions will use the same sales tax, you can set it as the default (but change it during transactions if necessary). If the majority of customers, products, and services will be subject to sales tax, you can check the boxes in front of the Mark all…statements (these designations, too can be edited in individual transactions).

You can see that using QuickBooks Online’s sales tax tools requires research, decisions, and extreme accuracy (state revenue departments run occasional audits). We have to stress again the importance of consulting with us if you need to take this on. It’s an exceptionally complex element of accounting, and we want to make it work for you.


Looking for a QuickBooks Expert?

QuickBooks ProAdvisor Houston TxWorking with a QuickBooks ProAdvisor is the best way to learn how to use QuickBooks to help your business grow and flourish. You won’t find a better way to get the support you need anywhere else.

As a small business owner, we realize that you may not have the budget to hire a QuickBooks expert. If you’re looking for a more economical way to get set up on QuickBooks, we provide cloud bookkeeping programs to match any business requirement. Here are our Quickbooks ServicesQuickBooks SetupQuickBooks Training, and QuickTune-up.

You can feel confident in knowing that our STAC Bizness Solutions team are Certified QuickBooks ProAdvisors. Meet Our Team.

If you would like to learn about all the benefits that STAC offers, just give us a call and we’ll provide you all the details. Call us at (844) 424-9637.

Are You Using QuickBooks Online’s Mobile App?

Are You Using QuickBooks Online’s Mobile App?

Even if you don’t travel for work (but especially if you do), you should explore what QuickBooks Online’s mobile app has to offer.

You already know how convenient it is to be able to access your company’s financial data from any desktop or laptop computer that has an internet connection. Still, there are times when you’d like to be able to complete some of your accounting tasks without firing up a full-blown browser and logging on to QuickBooks Online.

If you haven’t yet tried out the site’s companion mobile app, you might be surprised at how much you can actually accomplish on your smartphone. Take a look at the app’s main menu (with a partial view of the Activity screen to the right):

You can’t do everything on QuickBooks Online’s smartphone app that you can do in the browser-based version, but there’s a surprising amount of functionality here.

Once you’ve downloaded the app and signed in with your QuickBooks Online username and password, you’ll see a home page divided into two vertical sections; you can toggle back and forth between them. One is your Dashboard, which displays current account balances and a graph showing an abbreviated version of your Profit and Loss report, as well as a graphical summary of paid and unpaid invoices. Click on Activity to see a list of your most recent actions and transactions.

Click on the three horizontal lines in the upper left of the screen, and the app’s main menu slides out. As pictured in the image above, this interactive list also serves as the app’s primary navigation tool. Any data that you’ve entered in the browser-based version (as well as anything you add here) will appear in list form when you click on an entry here. To add customers, invoices, sales receipts, etc., click on the + (plus) sign. You can also enter new transactions from each individual list screen.

Adding Transactions

If you’ve worked with mobile apps at all, you know that the user interface is different from what you see in full versions of applications accessed through a browser. QuickBooks Online’s app, though, is exceptionally easy to understand and use – perhaps even easier than the browser-based QBO.

Take the app’s New Expense screen, for example. At the top of the page is a camera icon. Click it to take a picture of a receipt. You can also enter the total manually in a field to the right. Below that are three buttons representing Credit, Check, and Other, so you can indicate how you paid for the purchase.

You’ll describe the expense by clicking on links that contain labels like:

  • Who did you pay?
  • What kind of expense is this?
  • Who was it for?

When you click on one, the app opens your list of related data. So, Who did you pay? opens your list of Payees. You can select one or add a new one. Click on the Billable button if the expense can be charged to a customer, and click Add a Split if you need to separate some of the items. There’s also room to add a Ref # and Memo. When you’re done, click Save to add it to your main QuickBooks Online file.

Viewing Existing Information

Besides entering data in the QuickBooks Online app, you can look up existing information.

You can just as easily find records and transactions you’ve entered either in the browser-based version of QuickBooks Online or on the app. You can follow the journey of an invoice as pictured in the screenshot above. QBO even prompts you to complete steps you haven’t taken. Click on the pencil icon in the upper right, and you can edit the data that appears on that screen.

Warning! Editing transactions that have been processed are risky. If you’re making errors that need correcting, we can help you determine when this is safe.

 

The QuickBooks Online app can also provide quick overviews of customer activity, with links to actions.

You may never need to access your QuickBooks Online data remotely on your smartphone. If you do, though, we can help you get set up with the site’s companion app so you’ll learn how they work together.

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Paper Timesheets versus Time Tracking Apps

Paper Timesheets versus Time Tracking Apps

Many businesses continue to rely on the conventional paper timesheets for their employees to track their attendance. Paper timesheets require a lot of dedication in the creation process and it can also increase your monthly cost. So why not go for a simpler solution that will make things easier for you? Here’s a quick look at some reasons why you should stop using paper timesheets and start using time tracking apps.

 

1. Reduce Clerical Mistakes

Paper timesheets require writing out the details of employees attendance and sometimes the words or numbers don’t appear clear. However, with time tracking apps, names and time tables are so clear that you will not have an opportunity to mix up things.

 

2. Save Time

The truth is that paper timesheets can be poured over for hours by employers. This is simply inefficient and costly for the business because that time could be used for other business dealings instead. A digital timesheet is non-negotiable as the employer can see when the employee logged in and out of the computer.

 

3. Increase Visibility

The pendulum swings both ways and the employer can be at fault with messing up paper timesheets. The employer can be accused of adjusting the paper timesheets. There is room for debate with paper timesheets that no employee would welcome.

Time tracking apps are more reliable and they include audit trails. The employees have digital records to back up their claims as to when they signed in and signed out for the day. This can really help when an employee has a dispute regarding the hours that they were paid for. There is that added bit of proof that an arbitrary piece of paper cannot provide.

 

4. Added Features

An employer can do more with digital timesheets than a piece of paper can provide. They can delegate some of their managerial responsibilities to the program’s features such as approvals, reporting, automatic reminders and online scheduling. The entire workplace operation process is streamlined.

These reasons are just a few of the advantages that time tracking apps, such as TSheets, provides over paper timesheets. The choice of using a virtual process is a no brainer in this digital age.  

We love TSheets time tracking and think you would too. Employees can track time on any device, you can easily integrate with various payroll programs, and the customer experience team is phenomenal! There are tons of amazing features, try it free for 14 days by clicking here:

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What Is a Vendor Credit, and How Do You Record One?

What Is a Vendor Credit, and How Do You Record One?

Whether you’re getting a vendor credit for a refund or a return, you can record it in QuickBooks Online.

When you’re dealing with your company’s vendors, you’re probably accustomed to money flowing in one direction: theirs. Maybe you send them to purchase orders and they send you invoices. Or they send you bills and you pay them. Or you walk into a store and buy something your business needs.

Sometimes, though, vendors owe you money. Probably the most common scenario is a return of merchandise, products that you’ve sent back to the supplier for any of a variety of reasons. You may be issued a credit of some kind simply because you’ve been a loyal customer, and a vendor wants to reward you. You might also get a rebate for an item you bought.

In these cases, you’ll enter a Vendor Credit in QuickBooks Online, which you can apply the next time you buy something from that supplier. Usually, the process is pretty straightforward, but sometimes situations arise that may make it hard for you to know how to record a vendor credit accurately. We can help if this happens.

Simple Steps

Let’s start with a simple example. Let’s say you received a shipment of pens that you’d planned to use as promotional items for your salespeople. The ink on some of the pens had gotten smudged, so your company email address printed on them was illegible. The supplier issued you a credit of $50.00 for future purchases and sent you a reference number to use.

It’s easy to complete a Vendor Credit form in QuickBooks Online for a simple credit. But other situations are more complicated.

Here’s how it would work. Click the + (plus) sign in the upper right corner of the screen and select Vendors | Vendor Credit. A screen like the partial one pictured above would appear. These are the fields you would need to complete:

Vendor – Click the down arrow in the field in the upper left corner and select the correct vendor, or + Add New.

Payment date – Change the default date if it’s not correct.

Ref no. – Enter a reference number if applicable.

Under Account details, click in the field under Account, and open the drop-down list by clicking the down arrow on the right. Select the account you used when you created the original expense. Enter a Description and the Amount of the credit.

You can add a Memo in the box at the bottom of the screen if you’d like, and select any Attachments to include from your file directories. Otherwise, click Save and close or Save and new.

Additional Input

There’s much more to the Vendor Credit screen that you didn’t need to consider for this example. The row where you entered Account, Description, and Amount contains several additional fields that you may need to complete in some cases. They are Billable, Markup %, Tax, Customer, and Class. If you’re not sure when these fields are required, ask us to go over these concepts with you.

There’s also another section under Account Details you may need to address: Item Details (click the arrow to open if necessary). You would only enter information here if you’re returning items to a vendor. Fields displayed there include Product/Service, Qty (quantity), Rate, and Sales Amt (amount). We don’t recommend that you do this the first time on your own; let us help.

Using Your Credit

How do you redeem this credit? QuickBooks Online reminds you to use it.

QuickBooks Online records your Vendor Credits and reminds you that they’re there when you go to pay that vendor again.

The next time you enter a transaction that involves—or will involve—sending that vendor some money, you’ll see a record of that credit to the right of the Check or Expense screen, for example. In the image above, a small box has opened as soon as the vendor’s name was selected. You can Add that credit to the current transaction or Open it if you want to see the original screen.

Not everyone uses Vendor Credits. Some businesses find workarounds. But we recommend you at least understand when and how they’re used so your bookkeeping is accurate and precise. We’d be happy to spend some time with you going over your financial relationship with vendors, and how QuickBooks Online helps you document it.

 


Looking for a QuickBooks Expert?

QuickBooks ProAdvisor Houston TxWorking with a QuickBooks ProAdvisor is the best way to learn how to use QuickBooks to help your business grow and flourish. You won’t find a better way to get the support you need anywhere else.

As a small business owner, we realize that you may not have the budget to hire a QuickBooks expert. If you’re looking for a more economical way to get set up on QuickBooks, we provide cloud bookkeeping programs to match any business requirement. Here are our Quickbooks ServicesQuickBooks SetupQuickBooks Training, and QuickTune-up.

You can feel confident in knowing that our STAC Bizness Solutions team are Certified QuickBooks ProAdvisors. Meet Our Team.

If you would like to learn about all the benefits that STAC offers, just give us a call and we’ll provide you all the details. Call us at (844) 424-9637.

Hire a QuickBooks ProAdvisor

To schedule an initial consultation with us, please click the button below.

7 Best Practices for QuickBooks Online

7 Best Practices for QuickBooks Online

Even if you’ve been using QuickBooks Online for a long time, it’s good to step back and evaluate your actions.

“Best practices” aren’t enforceable rules. They’re simply guidelines businesses commonly follow in one area or another. If you’re in retail, for example, one best practice might be to always ask customers checking out if they found everything they were looking for. This serves two purposes: It conveys a feeling of concern for the customer’s shopping experience, and it may also lead to increased sales.

QuickBooks Online has many best practices, some of which may serve multiple purposes, including these:

  • They keep your company data safe and clean.
  • They provide insight on your financial status.
  • They save time.
  • They can lead you to better relationships with customers and vendors.

Are any or all the following common practices for your business?

1. Reconcile accounts regularly.

One of QuickBooks Online’s most useful features is its ability to connect to your financial institution’s websites and download cleared transactions. QuickBooks Online also offers tools to help you keep your accounts reconciled online like you used to do every month when your paper statement came. Reconciling accounts can help you uncover errors. It gives you a truer picture of your cash flow, and it improves the accuracy and timeliness of some reports.

It’s not a particularly pleasant process, but you should be reconciling your accounts regularly in QuickBooks Online. We can help.

2. Clean up your lists.

Some lists in QuickBooks Online aren’t overly long. You don’t have to worry about, for example, Payment Methods, Terms, or Classes. Your lists of customers and vendors, products, and services, on the other hand, can grow unwieldy over the years. This means it can take more time than it should be scrolling through lists when you’re using those entities in transactions. It also puts unnecessary stress on your company file. If you can’t delete any, at least make them inactive.

3. Never leave QuickBooks Online open when you leave your work area.

This goes for everyone, even people who work alone and don’t access their company files away from their work areas. The obvious reason is to keep someone else from getting in and authorizing payments, for example, or otherwise compromising your financial information. It also protects the integrity of your data file in case your internet connection suffers some kind of outage.

4. Keep track of 1099 vendors.

Whether your company uses 10 vendors or a hundred or more, you may have to supply at least some of them with an IRS Form 1099 at about the same time you’re preparing W-2s for employees. Your 1099-related tasks will be much easier if those individuals and/or companies are earmarked. If you think vendors might need 1099s when you create their records in QuickBooks Online, click in the box to the left of Track payments for 1099 in the lower right corner. Not sure? Ask us.

5. Classify everything with care.

Every time you have to create a record or transaction where categories are involved (i.e., Classes, Customers and Vendors, Territories), check and double-check that you’ve assigned them the correct classification. Errors here can result not only in problems with daily workflow, but your reports will not be accurate.

6. Create a meaningful group of Classes, and use them faithfully.

They’ll help you make better business decisions.

To create your list of Classes, click the gear icon in the upper right and select All Lists | Classes | New.

7. View reports on a regular basis.

There are some advanced financial reports in QuickBooks Online that we should be creating for you on a regular basis, either monthly or quarterly. These include Profit and Loss, Balance Sheet, and Statement of Cash Flows. The mechanics of creating them aren’t difficult, but analyzing them is. You should be running reports on your own at frequencies that you think would be helpful, like A/R Aging Detail, Unpaid Bills, and Sales by Class Detail.

If you’ve been using QuickBooks Online for a while, you could probably come up with your own list of best practices. If you’re new to the site, consider scheduling some time with us to go over more of them. Develop good habits from the start, and there won’t be nearly as much need for troubleshooting down the road.

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Tax-Deductible Expenses: Are You Recording All of Them?

Tax-Deductible Expenses: Are You Recording All of Them?

2017 income tax preparation seems a long way off. Make it easier by tracking all the deductions you can take.

You’ve heard it said before: Tax planning should be a year-round process. It’s so true. Your life will be a lot easier early next year when all your tax forms start rolling in.

Forms like 1099s and W-2s do a lot of the tracking for you. You only need to transfer data over to your IRS tax forms and schedules. But what about the daily stuff, the expenses you incur as a part of your workday that no one else is documenting? There are a lot of tax-deductible costs that can really add up when it’s time to file.

The IRS has two criteria for evaluating the validity of business expenses. First, is it ordinary? Is it something that other companies in your trade or profession would commonly buy? Second, is it necessary? Is it “…helpful and appropriate?”

Warning: Some expenses that you think might be deductible are not. Obviously, you can’t claim the costs of personal items. The IRS specifies two other types of expenses that can’t be deducted: Capital Expenses and those used the calculate the Cost of Goods Sold. Questions? Ask us.

Pulling together all that numbers required for the IRS Schedule C can be challenging. Let us know if you have questions.

Here are some examples of expenses that you might not consider, but which should be recorded as they occur so you don’t forget about them come tax time.

Advertising and promotion

Some of these expenses are obvious. For example, you might report printing costs for brochures, ad space bought, and postage for mailers and other business correspondence. But there’s much more that fits into this category. Think about everything you do that helps promote your business, like expenses related to:

  • Business cards
  • Team sponsorships
  • Your website (including start-up and maintenance fees)
  • Graphic design
  • Workshops/Webinars

Insurance

Do you have any kind of business insurance, like liability or malpractice? Your premiums are deductible.

Car and truck expenses

Understandably, you can only deduct expenses for miles driven for business purposes. If you have a vehicle—either owned or leased—that you also use for personal driving part of the time, you’ll need to track those two separately.

There are two options for calculating business mileage: Actual Expenses and Standard Mileage. To calculate the latter, you’d multiply the number of business miles driven by 53.5 cents for the tax year 2017, then add tolls and parking fees. The Actual Expense method is more complicated; it involves many costs and recognizes depreciation of the vehicle. Check with us if you’re planning to claim expenses for a car or truck, as there are additional rules governing this deduction.

Postage and office supplies

Yes, they’re deductible if you need them for your business.

Meals and entertainment

Familiarize yourself with the rules for this one. They’re complicated, and the IRS looks closely at such deductions.

Business use of your home

Ditto. There are all kinds of regulations, restrictions, and exceptions here, even if you use the simplified method that the IRS introduced a few years ago. Further, the home office deduction can be an audit red flag.

The rules are very specific and very rigid. For example, even if you use your home’s land line for business, you can’t deduct it. Add another line for business, and you can.

Professional and legal fees

If you pay an individual or firm for services provided to help you operate your business, those fees are often deductible. This includes lawyers, accountants, and tax preparers, of course, but as always, there are exceptions. You can’t usually, for example, deduct attorneys’ fees if you were getting legal help to buy business assets.

Dealing with Details

As you can see, there are many allowable business expenses that require meticulous record keeping. You can, of course, do this on paper or in a spreadsheet. There are cloud-based applications specifically designed for this purpose. If you’re interested in checking these out, let us know. We’re always available to help you plan for future tax filings.

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