Basic sales tax setup for QuickBooks DesktopLast updated on 02/28/2023

The Basic Sales Tax tracking setup is a good fit for your company if:

• Your company does not need to track and manage multiple sales tax rates.

• Your company does not plan to file and pay taxes directly from QuickBooks.

• Your company is new to QuickBooks or you are a first-time QuickBooks user.

If this does not apply to your company, see QuickBooks Desktop Users - FAQ to explore other options.

Track your sales tax liabilities quickly and accurately

The Basic Sales Tax tracking option is already configured in ServiceTitan. As soon as you complete the required QuickBooks setup and set your sales taxes in ServiceTitan, you can start tracking sales tax. You can check your sales tax liabilities easily by running a QuickReport in QuickBooks.

Calculations

Sales tax will be calculated in ServiceTitan and not in QuickBooks.

Sales tax will be calculated in ServiceTitan based on the tax rates you have set up. It will populate on the ServiceTitan invoice in the tax field.

Required ServiceTitan setup

Before exporting to QuickBooks, you must set up your sales taxes in ServiceTitan. This starts with setting and applying tax zones.

1. Go to Settings > Invoicing > Tax Zones.

2. Click Add Tax Zone.

3. Enter a Name for the tax zone. Example, “Glendale” or “Los Angeles County“.

4. Enter a Tax Rate.

5. Enter the zip codes that you service in the ZipCodes field. This is how ServiceTitan determines which tax zones are assigned to your customers.

   • If you have certain sales tax rates that only apply to one or more zip codes, enter that zip code or those zip codes.

   • If you have one rate for all zones for your business, you can enter an asterisk (*) instead of listing the zip codes. This will assign the tax zone to every customer by default, unless their address has a zip code that is listed in another tax zone. 

6. Click Save and repeat for each tax zone as necessary.

7. After you have created the tax zones, click Set Tax Zones. This applies the changes and assigns your customers their respective tax zones.

Note: Make sure your customers’ addresses are Google verified.

You can manually add a tax zone to a customer by going to their customer record and clicking the Pencil .

Taxable equipment and services setup

For sales taxes to be calculated properly, you must configure your taxable equipment and services in ServiceTitan.

For Services

1. Go to Pricebook > Services.

2. Click Actions for the item and select View/Edit Service from the options list that opens.

3. In the Edit Service screen that opens, check the box labeled Taxable then click Save.

For Equipment

1. Go to Pricebook > Equipment.

2. Click Actions for the item and select View/Edit Equipment from the options list that opens.

3. In the Edit Equipment screen that opens, check the box labeled Taxable then click Save. 

If you need to change multiple items, you can export the Pricebook.

1. Go to Pricebook > Import/Export. In the Import/Export page, click the Export tab.

2. Click the Export button. This should automatically download an Excel version of the Pricebook to your browser.

3. Open the Excel file. In the Services or Equipment tab, navigate to the Taxable column.

4. Enter “1” in the Taxable column if the item is taxable. Enter “0” in the column if the item is nontaxable.

5. Save your work and import the Pricebook Excel file back into ServiceTitan.

Required QuickBooks Desktop setup

A Sales Tax Payable item must be set up in the Item List in QuickBooks before exporting from ServiceTitan. This only needs to be completed once. The created item will be used in QuickBooks to represent your sales tax.

1. Click Lists and select Item List from the dropdown.

2. At the bottom of the window, open the Item menu and select New (or use the shortcut CTRL + N).

3. Enter the following information into the New Item window.

   • Type: Service

   • Item Name: Sales Tax Payable

   • Account: OtherCurrentLiability

4. Click OK. The Sales Tax Payable account should now show in your item list.

1. Make sure you have set up your sales taxes in ServiceTitan and make sure the required Sales Tax Payable item in the Item List has been created in QuickBooks.

2. Confirm that sales tax has been calculated on the ServiceTitan invoice. Sales tax is shown in the tax field on each invoice. 

3. Batch, post, and export the invoice in ServiceTitan.

4. After successfully exporting from ServiceTitan, check the QuickBooks invoice to confirm that the sales tax was populated on the invoice. It should show as a line item.

5. Run a QuickReport to see the activity for sales tax.

   1. Click Lists and select Item List from the dropdown. 

   2. In the Look for search bar, enter “Sales Tax Payable”.

   3. At the bottom of the window, click Reports and  select QuickReport: Sales Tax Payable from the dropdown. The report opens. 

Note: If you’re  using a TAX0001 item instead of a Sales Tax Payable item, you must complete these steps using TAX0001 instead of Sales Tax Payable.

You can’t use the Sales Tax Liability Report in QuickBooks because sales tax is represented as a line item on the invoice. To determine your sales tax liability, you must use a QuickReport.

1. Click Lists and select Item List from the dropdown. 

2. In the Look for search bar, enter “Sales Tax Payable”.

3. At the bottom of the window, click Reports and  select QuickReport: Sales Tax Payable from the dropdown. The report opens. 

4. Sales tax activity will populate in the QuickReport based on the invoice date set in ServiceTitan.

See QuickBooks Desktop Users - FAQ.