The United States and International versions of QuickBooks handle the sales tax preference of your items (that is, whether a given item should be taxed by default) in different ways. This article covers some of the steps you need to take to achieve proper sales tax calculations in international versions of QuickBooks.
NOTE: You should consult your accountant with any questions about the impact of sales tax code additions or changes.
Handling of Non-taxable Items
The United States versions of QuickBooks Desktop and QuickBooks Online provide a default non-taxable tax code named "NON" that is used on invoice items that should not have sales tax charged. However, international (non-US) versions of QuickBooks do not provide this code.
To use ServiceTrade's connection to international versions of QuickBooks, you will need to create a new sales tax code, or adjust an existing sales tax entry, for ServiceTrade to use when sending non-taxable invoice items to QuickBooks.
QuickBooks Desktop via Web Connector (Canadian Version):
- In QuickBooks, go to the Sales Tax menu (if available) or the Lists menu and select Sales Tax Code List.
- Option 1 (recommended): Create a new tax code. Click the Sales Tax Code button, then click "New" in the menu that appears. Set the sales tax code to be NON, enter a description (such as "Non-Taxable Sales"), and set the item to be Non-Taxable. Click OK to save the item.
- Option 2: Rename an existing tax code. Right-click on the sales tax item that you want to modify, and choose "Edit Sales Tax Code" in the menu that appears. Confirm that the item is set to be Non-Taxable. Change the sales tax code to NON and click OK.
If you choose Option 2, please note that the sales tax code name change may affect existing invoices whose invoice items used that tax code.
QuickBooks Online (Canadian Version):
- Under Sales Tax Centre, click "New Tax".
- When prompted to choose what sort of tax to add, choose "A custom tax". Click Next.
- In the Tax Name box, enter NON. In the Tax Agency box, enter a representative description (such as "Nontaxable Sales"). Check the box for "This tax is collected on sales". Click Next.
- In the Sales Rate box, enter 0.00. Click Done.
The process for adding new sales tax codes to other international versions of QuickBooks varies by country. Please refer to QuickBooks documentation for more information on adding sales tax codes.
Handling of Taxable Items (QuickBooks Online)
The United States version of QuickBooks Online only allows you to specify whether an item is taxable or non-taxable by default. However, international versions of QuickBooks Online allow you to choose a tax code for each of your items; that code indicates the rules under which that item is treated as taxable (or not) in QuickBooks Online.
IMPORTANT: If you use an international version of QuickBooks Online and you choose to let the ServiceTrade invoice determine whether items are taxable on your invoices in ServiceTrade, you MUST select a tax code that has a tax rate greater than zero on each of your items in QuickBooks. If your items in QuickBooks Online are assigned a tax code that has a sales tax rate of 0.00, line items on your QuickBooks invoices that use those items will be marked as nontaxable even if those items were marked as taxable on the invoice in ServiceTrade.