Sync with Connex is a third-party automation tool that automatically syncs data from online stores with QuickBooks, so your books are up-to-date and accurate. Our web-based software will import a carbon copy of the order and update the inventory in QuickBooks. Today we are going to discuss best practices for handling the sales tax portion of the sale.
Sales tax compliance is difficult to manage, but it doesn’t have to be.
Knowing the appropriate sales tax rates for your business can be tricky. Below we outline the available options for syncing sales tax into QuickBooks using Connex. Much of what you choose will depend on if you have a single or variable tax rate.
Single Tax Rate
If you have a single tax rate, you can use QuickBooks tax codes. QuickBooks is designed for standard tax rate situations. For example, only paying tax in a state with a flat rate, such as Massachusetts.
Variable Tax Rate
A variable tax rate means you charge tax in multiple locations with varying rates. The sales tax calculation changes based off the customer’s location, such as city, county, and multiple states. Many ecommerce businesses use a variable tax rate as some states require this. Setting up variable tax rates in QuickBooks can be challenging, especially when dealing with big states like California with over 100 jurisdictions. In these scenarios, it is best to use a 3rd party service, like Avalara AvaTax, to help manage tax compliance.
If your shopping cart is calculating the variable rate, you likewise do not need QuickBooks tax codes. The QuickBooks tax field is designed for a static rate.
How does Connex map tax?
Now that we have discussed single and variable tax rates, let’s go over how to manage tax using Connex. Connex gives you the flexibility to import the tax on the order how you see fit. Please note, the configuration differs slightly between QuickBooks Desktop and Online.
Map Sales Tax Settings
Map QuickBooks Tax Codes: Connex allows you to match existing QuickBooks tax codes based on the city, county, or state to QuickBooks. The software will search for a match by city first, county next, then state. If city or county are missing, Connex will use the tax code where the state matches.
Use this method if you manage sales tax in QuickBooks. You can add a single or grouped tax code to Connex, depending on your specific need. When mapping codes, Connex sends the order to QuickBooks without tax, then instructs QuickBooks to map a tax code. QuickBooks then recalculates the tax on the order.
Add Tax As A Line Item: With this enabled, the tax on the order will appear as a line item, called SalesTax, on a sales receipt or invoice. All the items on the sale will say non-taxable. Connex will combine the tax into a single, sales tax payable account in QuickBooks.
This method is useful if you have multiple tax rates, such as charging different tax rates in different states.
Use Avalara to manage tax: This option is specific to QuickBooks Desktop editions. If you use Avalara to manage sales tax, you can enable this option in Connex. The tax on the order will appear as a line item, called Total AvaTax, on a sales receipt or invoice. There is no need to use QuickBooks tax codes if a 3rd party service, such as Avalara, is managing tax compliance.
QuickBooks Automatic Sales Tax: QuickBooks AST is specific to QuickBooks Online. With QuickBooks AST enabled, sales tax is calculated automatically based on the shipping address and location of company. If you are using AST, there are no sales tax settings to configure in Connex. QuickBooks communicates to our software that this is turned on and no tax mapping will be required. Please note, AST is currently applicable for the US only.
In conclusion, QuickBooks tax rates are okay if you have a single rate or are grouping a few tax codes by state or county. If you have multiple tax rates, adding tax as a line item is usually the best option. We recommend looking into a 3rd party service for complex scenarios, as the cost of supporting and maintaining your taxes in QuickBooks could exceed the cost of the 3rd party service.
Mapping Sales Tax and QuickBooks Video
Do you wish you had a way to simplify ecommerce accounting? Connex may be the solution for you.
Like so many of our customers, we have a desire to save time by eliminating data entry. Our mission is to simplify ecommerce accounting for small business owners and accountants so they can focus on growing their business.
Recommended by Intuit itself, Connex for QuickBooks frees you from manual data entry, and gives you peace of mind that your sales, orders, and inventory are up-to-date in QuickBooks.
After over ten years in business, we’ve identified the top five reasons why customers choose to Sync with Connex.
- Save Time
- Reduce Stress
We have integrations for QuickBooks Online and Desktop
We work with the most popular market places, shopping carts, shipping solutions, and online platforms on the market to make freedom from data entry a reality. To see a full list of supported integrations, please visit https://www.syncwithconnex.com/integrations.
How can you decide whether Connex is right for your business?
During this introductory call, you will discover how Connex can help you to:
- Eliminate manual data entry into QuickBooks Online or QuickBooks Desktop
- Automatically update your inventory and prevent oversells and refunds
- Manage sales from multiple channels in one app
- Connect your shipping solutions to QuickBooks
- Have accurate financial information in your QuickBooks every day
Are you unsure whether Connex is right for your business?