handling taxes on bills

Sales taxes paid on purchases are part of the cost. Just post them to the same account as the rest of the items.

The only time you need to track sales tax is the ST collected from customers.

Thanks Laura.

How about for inventory items that I resell. If I pay taxes on those purchases i think they can offset the sales tax we collect on our sales (and ultimatley pass on). Is there some way QB manages this? (FYI - we dont do this yet but I just want to understand it)

thanks Ian

Thanks Laura.

How about for inventory items that I resell. If I pay taxes on those purchases i think they can offset the sales tax we collect on our sales (and ultimatley pass on). Is there some way QB manages this? (FYI - we dont do this yet but I just want to understand it)

thanks Ian

Most companies that purchase items for resale DO NOT pay sales tax on those items--usually the customer pays the sales tax. In some states the reseller pays the tax and not the customer.

I don't think that I have seen a case where both the reseller and the customer paid taxes on the same item. You should check your state sales tax rules to see what applies to your company.

QB is setup to track the sales tax collected rather than the sales tax paid.

If you have a copy of QB that is written for your area, it normally is equipped to handle taxes according to the way the authorities require it to be processed. For example we have a Federal Sales tax that is collected on all goods and services, when you pay it you accumulate the tax paid and subtract it from tax collected on sales, if you don't have enough sales tax collected you get a refund. We also have a Provincial Sales tax that is only collected on retail sales, all items purchased for resale are purchased tax exempt. For items purchased as an operating expense, the cost of the item and the tax paid is charged to the appropriate expense account.

The US version of QuickBooks is setup to track US sales tax. Unfortunately, each STATE handles sales tax differently. They all have different rules as well as different rates.