Sales tax setup: Sales Tax by tax zoneLast updated on 02/28/2023

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

• Uses QuickBooks.

• Wants to track and manage multiple sales tax rates.

• Wants more detailed sales tax reporting.

• Does not plan to file and pay taxes directly from QuickBooks.

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

Manage multiple tax rates using tax zones

The Sales Tax by Tax Zone option requires you to create tax zones in ServiceTitan and then create a service type item in QuickBooks for each zone. This allows you to track your liabilities for multiple tax rates, which makes filing and paying taxes to different agencies more efficient.

Calculations

Sales tax is calculated in ServiceTitan and not in QuickBooks. If you want QuickBooks to calculate sales tax and use its tax reporting, see Set up QuickBooks Desktop sales tax.

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.

Set up a Service Type item to represent the sales tax in QuickBooks.

This setup needs to be done for each tax zone you want to track sales tax. It ensures that sales tax exports correctly from ServiceTitan and is mapped to the correct Service Type Item and General Ledger account in QuickBooks.

After the invoice is batched, posted, and exported from ServiceTitan, the sales tax shows as a line item on the QuickBooks invoice.

You can run a QuickReport in QuickBooks for each sales tax item you create. This allows you to track and manage your sales tax liabilities.

Setup overview

Sales Tax by Tax Zone allows sales tax to be tracked by location-specific rates. Sales tax is calculated in ServiceTitan and exported to QuickBooks as a service type line item.

This setup also allows you to track multiple sales taxes within the same tax zone. For example, if your tax zone contains both state and county taxes, you can track these taxes separately in ServiceTitan and QuickBooks.

• This option is not configured by default. To use this option, contact your success or implementation manager to configure your account.

• If you see Error: There is an invalid reference to QuickBooks Item... on the Pending Export Report, you may need to:

  • Set up a QuickBooks item for the tax zone.

  • Go to Settings > Tax Zones and ensure a QuickBooks item is linked to each tax zone.

• You can’t use the Sales Tax Liability Report in QuickBooks as each sales tax is represented as a line item on the invoice. To determine your sales tax liability, go to Lists > Item List. Run the QuickReport for each sales tax item you have created in QuickBooks. If you want QuickBooks to calculate sales tax and use its tax reporting, see Set up QuickBooks Desktop sales tax.

• Sales tax activity populates in the QuickReport based on the invoice date set in ServiceTitan.

Set up tax zones

Before exporting to QuickBooks, 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.

   Note:“*” can be used as a wildcard. Example: 91* would mean that tax zone will apply to any customers with a zip code that starts with 91

3. Set the tax zone name and rate, and assign zip codes. 

4. Click Save.

5. When you’re finished adding tax zones, click Set Tax Zones to apply the settings to your customers.

To manually add a tax zone to a customer,  go to their Location > Edit > Tax Zone.

You can track multiple sales taxes within the same tax zone. For example, if your tax zone contains both state and county taxes, you can track these taxes separately in ServiceTitan and QuickBooks. Please contact your success or implementation manager to configure your account.

Taxable equipment and services setup

For sales taxes to calculate properly, configure your taxable equipment and services in ServiceTitan:

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

2. Click the More icon next to the item and select View/Edit Service or Equipment.

3. Check the box labeled Taxable. 

4. Click Save. 

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

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

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. For more information, see Import and export your pricebook.

A sales tax item must be set up in the Item List in QuickBooks for each sales tax you want to track. Each item you create is used in QuickBooks to represent a sales tax item. This must be done before exporting from ServiceTitan.

1. Open the Lists menu and select Item List.

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

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

   • Type—Service

   • Item Name— Example, “Glendale Sales Tax”

   • Account—OtherCurrentLiability

Link a QuickBooks item to a tax zone

Link your QuickBooks items to the corresponding ServiceTitan tax zones:

1. In ServiceTitan, go to Settings > Tax Zones > Edit for the appropriate tax zone associated with the sales tax item.

2. Enter the name of the QuickBooks item in the Sales Tax Item field. This ensures that the sales tax maps to the correct item when exported to QuickBooks.

1. Before you export sales tax to QuickBooks:

   • Ensure the required service type items in the Item List have been created in QuickBooks. An item must be created for each tax zone you have set up in ServiceTitan.

   • Ensure that each tax zone in ServiceTitan is mapped to the correct item in QuickBooks.

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

To export sales tax to QuickBooks:

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

2. After successfully exporting from ServiceTitan, check the QuickBooks invoice to confirm that sales tax is populated. It should be a line item.

How to run a QuickReport for sales tax liabilities

You can run a QuickReport to see your liabilities for each sales tax. To run the QuickReport:

1. Go to Lists > Item List.

2. In the Look for search bar, enter the name of the sales tax.

3. At the bottom of the window, select Reports > QuickReport.

See QuickBooks Desktop Users - FAQs.