Sales Tax and Rounding

Just do a sales tax adjustment to get rid of the pennies due to rounding differences. Use something like your over/short account for the adjustment. As long as the differences each month are only pennies then don't worry about it.

What report are you refering to? Sales will always be reported for the time frame specified but payables will always be reported as the balance as of the end date specified in the report. Payables always show balances -- that's the nature of balance sheet accounts.

I have the rounding error figured out. It turns out I have done that before, but what has been tripping me up is that apparently, at some point along the line there was a discrepancy between what my "Sales Tax Liability Report" gave me for figures versus what I put on a tax form. My guess at this point is, I used figures from a P/L statement to fill out the form instead of using the internal ST report which differs for whatever reason. So now the problem is, QB is keeping a cumulative total of collected tax and tax payable. So at this point, when I run a report for any tax period (I pay semi-annually), the numbers on the report do not mirror what is on the corresponding tax form. I see GL entries where I made adjustments to account for the rounding and where I decreased the amount owed by the amount of tax I paid out to vendors. I am completely lost as to where the discrepencies are occuring. I'm not sure if I changed a transaction(s) in the past that has created this or what, but I would like to start from scratch! Is there any way to zero out the balances at some point? Other suggestions. (and before you suggest "get an accountant" I have one, first time for this tax season, but generally would like to have the basics in order before handing the books over to him).

A correction or addendum to my previous post. After a bit more research, the discrepancy began in TY 2006. When I run the sales tax liability report for that tax year (I was filing annually at the time) it does not match the numbers on the hard copy that I printed at the time. The same is true for my P&L statement. Current run report does not match up with the hard copy. I don't know exactly how this happened (but pretty sure I make boo boo) but I am confident that I have not cheated the gov't what they were owed. I know that at a time previous I did some "cleanup" work on the books to consolidate some accounts and move some accounts around. What I though was simple stuff to streamline the books. In hind sight, perhaps not the best idea. So the trouble now is, whatever changes I made that altered those figures is forcing QB to recalculate my sales tax liability, so when I run a liab. report for the current period, it is including the amounts that were allegedly under and/or overpaid based on the new figures. What are my options at this point (besides whimper and bang my head against the desk - because that is a given)?

First do an adjustment dated 1/1/2008 to clear any prior year errors. Open the sales tax payable account register by way of the chart of accounts. Look at your 12/31/07 balance and substract any your December 2007 sales tax payment made in January 2008. Use this balance for the first adjustment. I'm assuming (or rather hoping) that the amount of the adjustment is not material. The purpose it to clear your prior year(s) balances so that you can start from scratch on 1/1/08.

You probably should check to see that your 12/31/07 financials match those supplied to the accountant at tax time. I would also "close" your QB file as of 12/31/07 so that any changes to items, etc won't impact prior years.

Next, I would run a sales tax liability report for the entire year. You should see the correct year end liability. Check your sales tax forms filed through November 2008 vs what is currently reported. Take the annual numbers (sales & tax) and subtract your November YTD amounts reported to the state. The difference is the amount you owe for December.

You may need to do another adjustment to clear out any differences due to rounding as your final step.