How to pay State Tax for use of material

Hello Group, How to pay the State Sales & Use Tax for material that was purchased with resale tax-exempt status.
Here is the situation: I run a small computer business. I built a Computer
for the company using tax exempt parts.
Now I have to pay the "Sales and Use Sales Tax" (GA requirement). How can I do that in QB?
Should I add my company as a new customer and create an Invoice, and then.?
Thanks in advance
Manuel
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That's certainly one way to do it. Treat your company as a customer via an invoice. Then just pay that invoice and just deposit that check back into the company.
You could also do a journal entry to debit purchases and credit sales tax payable. Then just cut a check to the state for the accumulated sales tax due. If this is a one time event then you could just use Write Checks to the state posting it to the purchase account.
If these parts are posted to inventory then I would probably go with the customer route so that the inventory is adjusted properly. With method 2 you would need to do an inventory adjustment to remove those parts used.
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Going the customer route would work, but he would be paying sales/use tax on the retail value of the parts, not the costs? I am still learning QB so I could be missing something. TK
Laura wrote:

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It is my understanding that the Use Tax is based on the cost to the company, not the retail value. I pay this every Quarter. First create an account called, "Sales Tax Expense". Then click on Pay Sales Tax, Click on Adjust, Click on Adjustment Account and enter the amount charging it to the Sales Tax Expense account. Taking things from inventory for business use is a separate issue from the tax thereon and can simply be charged to your office equipment repair account. I created two accounts for this so I always know which items were previously taxed and which ones weren't. When tax time rolls around, look at the account showing total items removed from inventory that weren't previously taxed so you can figure what you owe.
Bob

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I would just charge the company the cost of the parts used in the computer.

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Laura,
Thank you so much for the answer. All my items are Non-Inventory, so no problem having to update the stock. Pursuing the new customer avenue and of course entering the invoice items at cost there is no problem. But, to pay the Invoice will require that the company must be set as a Vendor as well, correct? Do I have to write a check? Can the bill (invoice) be paid otherwise without having to use the bank register?
How about if I create an item called discount (or Company Use) then posting it in the invoice discounting 100% the Total value of the invoice? I tried that and indeed the tax appeared in the Sales Tax Liability report!
Example:
Original Invoice was:
Material 100.00
Tax 10.00
Total 110.00
Invoice with total amount discounted:
Material: 100.00
Disc: -110.00 (new line)
Tax 10.00 (was still kept in the invoice!)
Total 0.00 (total is now 0)
Is this orthodox or it will cause other problems?
TIA
Manuel

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If all you're looking to do is pay the ST for material you used within the company, simply go to "Pay Sales Tax". Click "Adjust". Click "Increase Sales Tax by..." and in the memo area put "Use Tax". This assumes you have QBPro 2006. I imagine there's something similar for other versions. I wouldn't do the invoice route.
I have a somewhat similar situation in that we pay sales tax on everything we buy. We can claim a credit for sales tax on items we purchase that were used on jobs that we charge sales tax on. So we generally end up paying less ST than QB says we owe. I go through the process I outlined above. I credit the account that originally paid the ST.
On Mon, 9 Oct 2006 14:50:48 -0400, "Manuel Davila"

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Steve,
Thanks for the input. We do have QB 2006. I think I still like the Invoice solution because in addition to pay the ST it also keeps trace of the use of our material.
We also have the same situation you described concerning products we sell that we previously paid ST.
Now I know what to do, thanks for the tip.
Manuel

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I tested out the Discount routine and it looks like it works perfectly. I did have to redit the item and change it to be non-taxable for it to work right. I can't see any issues with it especially since you probably should not be showing this as income to the company in the first place. Using this discount method eliminates this problem.
I do have one correction to your example. My testing came out to the following:
Original Invoice was:
Material 100.00 Tax 10.00 Total 110.00
Invoice with total amount discounted:
Material: 100.00 Disc: -100.00 (non taxable) Tax 10.00 (was still kept in the invoice!) Total 10.00 (sales tax only)
This leaves the sales tax liability that you are looking for plus removes the sale of the materials that you should not be showing on the books.

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Laura,
Thank you for taking the time to test the routine. If you discount the full total of the invoice (as non-taxable) then the invoice will show as paid in full, hence no need to create a bill to pay it.
Material: 100.00 Disc: -110.00 (non taxable) Tax 10.00 (was still kept in the invoice!) Total 0.00 (invoice paid in full, no need to create a bill)
This is the exact result desired:
1.. No need to create a second redundant transaction to paid the bill 2.. The ST will still show in the Tax Liability 3.. Transaction can be tracked Thanks again, Manuel

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How did you get the Discount to include the tax amount? Is the tax line manually added or calculated at the bottom of the invoice?

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No. no, QB (2006) is smart enough to keep the sales TAX!! This is uncle SAM's trick: you can discount the whole thing except of ourse you still have to pay the Tax :-) Just tried and you'll see

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You just lost me. I put in the discount amount of 100% it picked up just the 100 but left the balance of the sales tax calculated at the bottom. That amount is still due in my test.

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How did you set up the discount? I used QB Discount account, which by the way does not let you enter quantity and when you enter the amount in "discount rate" it will put it automatically in -X format.
If you want I can send u a copy of the invoice to you email. Mine is ( snipped-for-privacy@atscomputes.com).

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Be sure that you leave under "Tax Code: [TAX} discount is applied before Tax" in the edit item (discount) window, do not check NON. Gotta go nit-nite, the Boss is calling

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Take a look at your sales tax payable account. when I set the tax code at taxable it resulted in zero balance and zero tax. I had to change my discount to Non tax in order to get the sales tax payable to be correct.
Unfortunately, this does leave an A/R balance so I guess we are back to the drawing board. I had a similar issue this summer at work (liquor store)-the boss purchased items (wine) for promos and charged them to her house account. The only way I could figure out how to clear the balance and get the charges over to expense (advertising) was to clear the balance by paying the account using the company credit card. It's an issue of credits vs debits and the only way I could get this corrected was to have the company pay the bill just like they were a customer. Not very elegant but it did work.

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Laura, I'm getting different results than you; when i click icon "Pay Sales Tax" there is the sales tax ready to be paid. I took five screen shots (invoice, chart of accounts, item details, ST Liability Report, and Pay Sales Tax). I think it would be a good idea for you to look at them to see what is different. I'll be glad to send them to you and to hear your comments (my email: snipped-for-privacy@atscomputes.com)

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Manuel Davila wrote:

As an aside, in my state stuff you buy, to use in your business for the production of income, is tax exempt.
If, for example, your company did software development and it was for this purpose you used the computer, no sales tax is required.
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Depends on the state. In Tennessee, they tax everything that doesn't end up on a product that is sold to the customer. For example, if I refinish a musical instrument, I pay tax on the sandpaper and paint brushes but not on the lacquer. With the way this state is, I'm surprised they don't tax me on the volatile lacquer fumes that evaporate during the drying process.
Bob
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In many states you pay sales Use tax if under normal circumstances you would pay sales tax in that state but you did not for some reason. We pay sales tax if we buy something tax-free in another state but it is taxable in our state. Or in the case of the OP, he purchased it using a reseller's ID when it is normally taxable. He is responsible for sending in the tax.
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