QuickBooks Online VAT Sales Tax

**This is supported with our Clover, Square, Shopify, SumUp, and Squarespace app integrations for the UK

QuickBooks Online offers functionality to enable submitting VAT returns. They cover the common tax rates here: https://quickbooks.intuit.com/learn-support/en-uk/help-article/value-added-tax/quickbooks-vat-codes/L9v5htbsT_GB_en_GB

Bookkeep offers VAT tax reporting into QuickBooks Online by leveraging the tax rates setup for VAT reporting.

As background, when we import data into our system we use categories and subcategories to display the journal entry lines that you can map to your accounts in your accounting platform.

Normally, subcategories are optional to be mapped, but for VAT sales tax codes, each line needs to be mapped or the posting to your QuickBooks may fail. To better understand how we properly post your VAT sales tax to QuickBooks Online, please read on with an example below.

**NOTE: If you need to refresh the tax codes from QuickBooks or have added new tax codes in QuickBooks that you need imported into Bookkeep, please refer to here for refreshing your accounts from QuickBooks: https://knowledge.bookkeep.com/refreshing-your-accounting-accounts

We take the tax collected explicitly from the source system (Square, Shopify, etc.) and then back into the revenue for that tax collected. We do not allow QuickBooks to calculate the tax for you. 

We map to the single tax rates, so it is best to use single tax codes that map to a single rate and not use a group code with 2 different rates. The reason for this is that QuickBooks will try to recalculate to the group rate if you open the journal entry and use the group rate. This is complicated, we know, but then so is sales tax!

Since we book revenue in our traditional mapping based on sales categories which are very different from the grouping by sales tax rates we back out the revenue in the journal entry used for booking sales tax. The journal lines at the top of the journal entry are marked with the "No VAT" tax code and our backed out revenue is also marked "No VAT." This results in the proper total amount of sales hitting the return. Any untaxed revenue is properly shown as Exempt.

Again, since this will cause the most problems: It's best to create single (not grouped) rates with the exact rate you are mapping to for the source app e.g. Shopify. The journal entry in QuickBooks Online calculates based on the group rate. That will cause an error if you want to manually adjust the journal entry in QuickBooks. It will try to calculate based on the total group rate and not the underlying single rate which we map to in the mapping window.

From QuickBooks you can visit Taxes from the Left navigation to then "Edit Rates" from the top right as shown below:

After clicking "Edit Rates" you will see your tax rates. If needed, you can add any necessary rates as shown below:

Once you have mapped all of your VAT sales tax subcategories like shown below, Bookkeep can post these journal entries:

Finally, below is an example journal entry with sales tax for VAT QuickBooks Online.

You will see lines 1-3 post the normal journal entry that Bookkeep completes. Line 5 shows the booking of the sales tax based on the amount collected and backing into the associated revenue. Line 5 has the mapped sales tax indicated in the VAT column on the right. Finally, line 6 backs out the amounts booked above connected to sales tax. This means that the Bookkeep sales tax clearing account will always remain zero. If you have any questions, please contact support@bookkeep.com.