How to setup Combined Sales Tax Rates in QuickBooks Online

Combined Sales Tax Rates.

Is your company required to collect and pay sales tax to two different agencies for the same sale? Well then you need to know how to setup combined sales tax rates in QuickBooks Online.

If you have any questions about QuickBooks Online Sales Tax. You can leave them in the comment section below and I’ll do my best to help you and of course if you feel the article helped you I hope you will click following the blog and get updates on new articles that come out all the time.

Some sales require that you pay sales tax to two different agencies for the same sale.

If you are required to do this in your situation then you must add a combined rate to the list of rates in the sales tax settings.

For example…

Let’s imagine we now have special sales that require that we collect and pay sales tax on these special sales for both Tennessee and Wyoming.

The Tennessee sales tax rate is 7% and the Wyoming sales tax rate is 4%.

We must add a combined rate called T & W. which stands for Tennessee and Wyoming this tax rate will be for any sale of products that require this combined rate.

Add tax agency in QuickBooks Online

So let's go ahead and add tax agency in QuickBooks Online. We click taxes then once we are in the sales tax center we click sales tax settings. First we have to add the Tax agencies. add Tax agency and then we pull down and you might have to scroll down on this little gray nub that they give here for Tennessee where the states are Tennessee.  Filing frequency put monthly just in case and the start date we can put October 1 of 2020 and save now.

We also have to add Wyoming click the pull down scroll all the way down to the Wyoming. Filing frequency monthly and again we start on October 1 of 2020. What we learned in the prior article is you would have to get the filing frequency from your accountant or the state Tax agency's website or by calling them. click save.

Add Combined Rate in QuickBooks Online

We have the two Tax agencies on the list and now that we have both Tax agencies on our list we now add the combined rate click add rate and choose combined rate. Now the name of the combined rate will be T and W.  The nickname of the first one will be ten for Tennessee and notice Tennessee is already in the top section so you don't have to go fishing for your tax agency because it's already on the list of saved Tax agencies on the top click Tennessee department of revenue and Tennessee’s rate was 7%.

The next rate was Wyoming WY is enough for the nickname and again that's also an agency that should be on the top of the scroll list because it's already saved and we click Wyoming and we put in the 4%.  So the combined total will be 11% when we make a sales receipt or an invoice. we click save.

Now you can see the nicknames and the total of the combined rate in the section of rates in the sales tax center or in the settings section of the sales tax center. Now we'll go back to the sales tax center and we will do notice there is zero due now because we have not used that rate on any transaction.

Create Sales Receipt with Combined Tax Rate

Let’s imagine…

On December 1 of 2020 we sold two apples and six bananas to a new customer named Martha Manystate and we received cash today.  

We will be making a sale receipt with combined tax rate. We will use the new combined rate.

So let's go ahead and do that click +new, sale receipt the customer we have to click add new and put the name Martha Manystate. Click save. Scroll down now we said two apples and six bananas. So apples 2 okay taxable, bananas 6 Taxable.  Don’t forget scroll down we have not chosen a rate we're going to choose T and W.  T and W combined sales tax rate. Click to See the math.

I like to click see the math to make sure it calculates it correctly. So this looks like about 11 of the subtotal. Now when we click save and close.

you can see if we scroll down we now have this $220 upcoming for Maine and this $434 upcoming for Tennessee $248 upcoming for Wyoming  because 220 out of the sixth whatever what it was for sales tax goes is payable to Maine and $434 is payable to Tennessee.

Trial Balance Analysis

if you click reports trial balance and you can see each of the separate individual tax agencies have been put in the trial balance for the specific amount owed for that tax agency and when it's time to pay you'll click taxes and you'll click view return and pay it exactly the way we learned in a prior article.