I am new . When I enter purchase invoices I get the message " You cannot track tax on accounts of types Accounts Receivable and Accounts Payable ?

Welcome to the Community, Brennan. It's great to know you're using QuickBooks Online. The error you encounter indicates that taxes cannot be applied directly to Accounts Receivable (AR) or Accounts Payable (AP) accounts. I'll explain why below.

Beforehand, can you tell us how you entered the purchase invoices? Are you recording a bill or an expense? This helps us identify the appropriate information to share with you.

Please know that you can't use AR and AP accounts when entering bills. This transaction affects AP accounts by default. Also, both accounts are managed automatically by QuickBooks to track what you owe and what you're owed.

If you're entering an expense, the error "You cannot track tax on accounts of types Accounts Payable and Accounts Receivable" occurs when you select AR or AP in the Category details section and a tax is applied. It's worth noting that the system only allows you to track taxes on the expense, checking, and income accounts. You can save the entry without an error if the amounts are Out of Scope of Tax.

To know more about when to enter bills, expenses, or cheques, explore this material: Learn the difference between bills, cheques, and expenses in QuickBooks Online.

With the information above, you should be able to determine what the error means and when it occurs. If you have other questions, feel free to click the Reply button below. We’re always here in the Community to help you. Have a great day!