Tracking sales tax on purchases from vendors

If you need to track sales tax on purchases (expenses, accounts payable), this must be tracked manually. QuickBooks is not setup to track sales tax automatically on non-sales transactions (such as bills, checks, purchase orders).

Tracking sales tax on purchases as an expense (not to be paid later)

   1. Create an expense account
   2. When creating a transaction (like a bill) in which you will be tracking sales tax, enter the bill as usual, but then go to the Expenses tab and select the expense account you just created
   3. On this line, enter the amount of sales tax in the Amount column (this will need to be calculated manually)
   4. Ensure that any detail in this transaction adds up to the correct total after clicking Recalculate

Tracking sales tax on purchases as a liability (to be paid later)

   1. Create an Other Current Liability account
   2. When creating a transaction (like a bill) in which you will be tracking sales tax, enter the bill as usual, but then go to the Expenses tab and select the liability account you just created
   3. On this line, enter the amount of sales tax in the Amount column (this will need to be calculated manually)
   4. Ensure that any detail in this transaction adds up to the correct total after clicking Recalculate
   5. When it is time to pay this sales tax, you can see the liability that has been accrued by looking at the Chart of Accounts
   6. This amount can be paid with a regular check, selecting the liability account used for tracking this tax under the Expenses tab