Set up and use VAT in QuickBooks Online
- December 18, 2020
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Learn how to set up and use the VAT feature in QuickBooks Online.
QuickBooks can automatically do the VAT calculations for you on your invoices and receipts for easy and accurate filings. Then, it lets you know when your tax payment is due, so you can file on time and avoid extra fees.
Here's how to set it all up and get started.
Step 1: Learn how QuickBooks calculates VAT
QuickBooks automatically calculates the total VAT rate for each sale based on the following:
- Your customer's VAT exempt status.
- Where you sell and where you ship.
- Your service or product's VAT category.
Learn more on how QuickBooks makes each VAT calculation accurate.
Step 2: Tell QuickBooks where you collect VAT
QuickBooks Online keeps track of your state's tax laws to accurately calculate VAT and returns. If you charge VAT outside of your state, you can also add other tax agencies you pay.
If you just signed up to QuickBooks, set up where you charge VAT for the first time.
To set up Sales Tax, follow the steps below:
- Go to VAT and select Set up tax.
- Enter Tax name, Description, Tax agency name.
- Enter your Business ID no (optional).
- Select your Start of current tax period.
- Select your tax Filing frequency for GST.
- Select your Reporting Method (usually it'll be Accrual, unless you are a professional service provider. If in doubt, please consult your accountant).
- Enter Sales rate, then select This tax is applicable on purchases, if applicable.
- Select Next, then select OK.
Once you have set up the tax centre, you can also add custom tax rates.
Step 3: Add tax categories to your products and services
Rules for how to tax a product can change depending on where you sell.
When you're ready, you can assign VAT categories to anything you sell. This lets QuickBooks know how much VAT you need to charge based on what exactly you're selling.
Step 4: Double-check your customers' info
Tax rates can also change if you ship products or perform services at your customer's address. And some customers are not required to pay VAT, like churches, schools, and other non-profit organisations.
Make sure you have your customers' correct tax status, billing address, and shipping address. Here's how to double-check your customers' info in QuickBooks.
Step 5: Track VAT from your customers
When you're done setting things up, you can start using the VAT feature. We'll show you how it works and where you'll see it when you create an invoice or receipt for your customer.
Step 6: Check how much you owe and why
Get a detailed look at the taxes you owe and why you owe them. This helps you make sure everything is accurate before you file and pay your VAT return.
Learn how to run the VAT Liability report to view your VAT info anytime.
Step 7: File your VAT return
QuickBooks Online tracks your payment due dates in one place so you can avoid late returns and extra fees. Once it's time to file, it's easy to review what you owe to make sure everything is accurate. Then, you can e-file on your tax agency's website or send your return by mail. After you file, you can track your new VAT payment in QuickBooks to keep your records up to date.
Learn how to file your sales tax return and record your tax payment.