Service Titan Knowledge Base

Sales tax setup: Multiple sales tax zonesLast updated on 08/30/2022

Tracking sales tax is a necessity for any business. This article will walk you through the setup for Multiple Sales Tax Zones.


Overview

Multiple sales tax zones are a good fit for your company if:

  • You are using the Sales Tax by Tax Zone setup and you want to track multiple sales tax rates within the same tax zone.

  • Your tax zone contains both state and county taxes, and you want to separate these to make tracking and filing sales taxes easier.

If this does not apply to your company, explore other sales tax tracking options by using the links in the menu to the right.

Tracking multiple tax rates

This feature allows you to easily track more than one rate in your tax zone. Sales tax will be calculated in ServiceTitan and exported to QuickBooks as a line item.

Sales tax will not be calculated in QuickBooks, as services and customers will export from ServiceTitan as non-taxable. Each sales tax rate in ServiceTitan will be mapped to a sales tax payable item in QuickBooks.

Calculations
Sales tax is calculated in ServiceTitan and not in QuickBooks

Sales tax is calculated in ServiceTitan based on the tax zones you have set up. It populates on the ServiceTitan invoice in the tax field.

You will turn on sales tax in QuickBooks

Even though QuickBooks is not used to calculate sales tax, you will need this feature turned on. This allows you to create sales tax payable items mapped to a Sales Tax Payable general ledger account.

You will set up a sales tax payable item in QuickBooks to represent the sales tax rate

This setup needs to be done for each sales tax rate you would like to track. It ensures that sales tax exports correctly from ServiceTitan and is mapped to the correct account in QuickBooks.

You will link this item to the corresponding tax zone tax rate in ServiceTitan
Sales tax will be exported to QuickBooks and show on the invoice as a line item

Sales tax will not populate in the tax field on the invoice (outlined in green). This prevents duplication of the sales tax amount. Exported customers and services will be set as non-taxable to prevent QuickBooks from calculating sales tax.


Set up multiple sales tax zones

If you are using the Sales Tax by Tax Zone setup, you may want to track multiple sales tax rates in your tax zones. For example, your tax zone may contain both state and county taxes that you wish to separate. By using this setup, you will be able to easily view your sales tax liabilities to each vendor using QuickReports.

This feature works by calculating sales tax in ServiceTitan, based on the tax zones you have set up. Sales tax will need to be turned on in QuickBooks, even though QuickBooks will not be used to calculate sales tax. It needs to be turned on so sales tax payable items can be created. These are mapped to a Sales Tax Payable general ledger account. To prevent QuickBooks from calculating sales tax, services and customers will export as non-taxable.

Currently, this feature does not allow you to use the full sales tax capabilities QuickBooks provides. Since services and customers export as non-taxable, you will not be able to use the Sales Tax Liability Report in QuickBooks or pay and file taxes directly from QuickBooks.

Required ServiceTitan setup
Tax Zone setup

Before exporting to QuickBooks, you will need to set up your tax zones in ServiceTitan.

  1. Ensure your customers’ addresses are Google verified.

  2. Go to Settings > Tax Zones > Add Tax Zone to configure tax zones.

  3. Set the tax zone name.

  4. Check the box for Charge multiple taxes for this zone.

  5. In the Tax Rate Table field, add each sales tax rate you would like to track within that tax zone. For example, you could enter a county and state tax rate. Click Add Another to add a new sales tax rate.

  6. If you have set up your QuickBooks sales tax payable items, you can link them in the QuickBooks Account field. However, you will be reminded to complete this later during QuickBooks setup.

  7. Assign zip codes to the tax zone.

  8. Click Save.

  9. When you have finished adding tax zones, you will need to click Set Tax Zones to apply the settings to your customers.

Note: You can manually add a tax zone to a customer by going to Search > ”Customer Name” > Location > Edit Pencil > Tax Zone.

Taxable equipment and services setup

For sales taxes to calculate properly, you will also need to configure your taxable equipments and services in ServiceTitan. To do this:

  1. Go to Settings > Pricebook > Services or Settings > Pricebook > Equipment.

  2. Click into the service or equipment.

  3. If you want to set the service/equipment as taxable, check the box beside the “taxable” field.

If you need to change multiple items, you can export the Pricebook. To do this:

  1. Go to Settings > Import / Export Data > Export > Pricebook > Export > Download.

  2. In the appropriate Excel tab, navigate to the “Taxable” column.

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

  4. Save your work, and import the Pricebook back into ServiceTitan.

Required QuickBooks setup
Turning on sales tax in QuickBooks

Sales tax will need to be turned on in QuickBooks, even though sales tax will be calculated in ServiceTitan. This is because having sales tax turned on allows you to create sales tax payable items. When sales tax is exported from ServiceTitan, it will be linked to these sales tax items.

Note: Although sales tax is turned on, this feature does not allow you to use the full sales tax capabilities QuickBooks provides. Services and customers will export as non-taxable. This means you will not be able to use the Sales Tax Liability Report in QuickBooks or pay and file taxes directly from QuickBooks.

To turn on sales tax:

  1. Ensure you are logged into QuickBooks as the administrator in Single-user mode. To toggle between Multi-user and Single-user mode, go to File > Switch to Multi-user Mode/Single-user Mode.

  2. Go to Edit > Preferences > Sales Tax > Company Preferences.

  3. Select “Yes” for “Do you charge sales tax?”

  4. Click OK.

  5. Select if you want to make all existing customers taxable, and select if you want to make all existing non-inventory and inventory parts taxable. Please note that these settings will not be used, as customers and services will export from ServiceTitan as non-taxable. This prevents duplication of sales tax on the invoice.

  6. Before you can save this setting, you will need to add the most common sales tax item or group you will be using. Refer to the procedure below (Creating a QuickBooks Item for each tax zone) for details on setting up tax items and groups. Note: This sales tax item or group will be the default sales tax rate assigned to your customers in QuickBooks.

  7. Click OK.

  8. Click OK again. This will automatically create a Sales Tax Payable general ledger account. Your sales tax items will be mapped to this account.

Creating a QuickBooks item for each tax zone

A sales tax item must be set up in the Item List in QuickBooks for each sales tax you would like to track. The created items will be used in QuickBooks to represent each sales tax. This must be done before exporting from ServiceTitan.

  1. Open the List menu and select Item List.

  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.

    • Item Type: Sales Tax Item

    • Item Name: Variable (this should match the tax zone/tax rate name used in ServiceTitan)

    • Tax Agency: Variable (this is the vendor you will pay the sales tax to)

    • These items are automatically mapped to the Sales Tax Payable account.

  4. Click OK. The item should now be visible in your QuickBooks Item List.

  5. Now, you will need to navigate back to ServiceTitan and add this new sales tax item to the appropriate tax zone. To do this, navigate to Settings > Tax Zones > Edit Pencil for the tax zone you would like to update.

  6. In the QuickBooks Account field, enter the name of the sales tax item you would like to link.

  7. Click Save.


Export sales tax

  1. Ensure you have completed the required QuickBooks setup, and your tax zones are set up in ServiceTitan.

  2. Confirm that sales tax has been calculated on the ServiceTitan invoice.

  3. Sales tax will show for each rate you have set up. You will also see a sum of the total taxes on the invoice.

  4. Batch and post the invoice in ServiceTitan.

  5. In QuickBooks, go to File > Update Web Services and run the web connectors for the appropriate business units.

  6. In ServiceTitan, go to Reports > Pending Export Report. Run the report to ensure your invoice has been successfully exported to QuickBooks.

  7. After successfully exporting from ServiceTitan, check the QuickBooks invoice and confirm the sales tax exported.

    Note:

    • Each sales tax rate will show as a separate line item on the invoice (outlined in red).

    • Sales tax should be listed as 0.00 in the tax field on the invoice (outlined in green).

    • Sales tax is not calculated in QuickBooks, even though sales tax is turned on. Customers and services will be set as non-taxable when exported from ServiceTitan. This ensures sales tax does not get duplicated.

    • Even though we are not using QuickBooks to calculate sales tax, sales tax must be turned on in QuickBooks. If sales tax is not turned on, sales tax payable items cannot be created.

  8. Confirm the sales tax on the QuickBooks invoice matches the sales tax calculated on the ServiceTitan invoice.

  9. You can run a QuickReport for each sales tax payable item to see which invoices they are used on. Go to Lists > ”Sales Tax Item Name” > Right-click > QuickReport.




Important note: Some features may not be currently included in your account and additional configuration may be required. Please contact technical support for details.