23 Nov Sales Tax by City
Managing Different Sales Tax Rates
Sales Tax Items are an effective way to manage multiple tax rates. Often these rates are based on county, but it is possible for cities to have specific rates as well. This situation can be further complicated if the e-Commerce solution used only has one sales tax rate for the entire state.
This question was submitted from someone in New York. The current sales tax percentages for New York State can be found at http://www.tax.state.ny.us/pubs_and_bulls/publications/sales_pubs.htm. California has a similar situation of multiple tax rates. The current sales tax percentages for California State can be found at http://www.boe.ca.gov/sutax/pam71.htm
For most efficient sales tax reporting, QuickBooks should be set up with a sales tax item for each county (or city if that is required for the reporting). To accomplish this, turn on the preference and set up the items as sales tax type on the item list and sales tax codes as needed. When using QuickBooks alone, it is possible to set up the sales tax item for the customer so the sales tax item is used automatically when sales transactions are entered in the future. If the volume of transactions from the e-Commerce solution is low, correcting the sales tax item in QuickBooks after the import is also a viable solution. However, there are several situations where this may not work: historical transactions that were not entered correctly, and large volume e-Commerce stores that the resulting work to re-code the transactions is too time-consuming.
At this point, we have two suggestions: one that works with the data from QuickBooks and one that works with the data from a Yahoo store.
For the QuickBooks solution, there is an add-on called QData Viewer. There are many reports available for this tool such as cash activity reports, general ledger summary reports, and sales reports. The later is the one that works in this case. By using the tool and the sales by ship to address, it is possible to extract a report for the sales tax reporting period subtotaled by city. Armed with that information, it is possible to combine the cities by county either manually or in Excel.
In summary, it is possible to set up various sales tax rates with related rules so the sales tax rates will be applied automatically. For most small business store owners, this becomes quite difficult to “guess” where the customers will come from in the future and too time consuming to set up the rules for each possible location. A more efficient solution is to export the range of orders into Excel and do a primary sort by state and a secondary sort by city. At this point, it is possible to put in the subtotals by city and/or additional calculations to add multiple cities together by county.
And one last thought, many Yahoo store owners use additional software to manage the orders. Many of these add-ons integrate between the Yahoo store and the QuickBooks data file with additional reports available within the add-on itself. Investigate if your add-on has such a feature to eliminate the problem completely.