The state sales tax rate increase from a couple years back is expiring on June 30th.  That means that the state sales tax will DECREASE by 1% on July 1st.  Thus, you will need to make the appropriate corrections in QuickBooks (Financials and POS).  Instructions are below for QuickBooks Financials (PC and Mac) and QB POS. 

 

Also, there is a wealth of information posted on the Board of Equalization site.  Some helpful information is here:

·         Board of Equalization site:  www.boe.ca.gov

·         The full publication is here:  http://boe.ca.gov/pdf/pub71.pdf

·         Quick list of tax rates for each CA city, effective 7/1/2011:  http://boe.ca.gov/sutax/pdf/Pending_Rates-07-11.pdf

·         Free instant Local Sales & Use Tax Rates calculator: http://boe.ca.gov/sutax/pdf/Pending_Rates-07-11.pdf

·         Excel list of all city tax rates:  http://boe.ca.gov/sutax/files/city_rates.xlsx

 

An example of the local changes are as follows.  This is NOT the complete list but a sampling:

·         Alameda County: 9.75% à 8.75%

·         Alameda County city of San Leandro: 10.0% à 9.0%

·         Alameda County city of Union City: 10.25% à 9.25%

·         Marin County:  9.0% à 8.0%

·         Marin County cities of Novato & San Rafael: 9.5% à 8.5%

·         Napa County:  8.75% à 7.75%

·         San Francisco City & County:  9.5% à 8.5%

·         San Mateo County: 9.25% à 8.25%

·         Sonoma County: 9.0% à 8.0%

·         Sonoma County cities of Cotati, Rohnert Park, Santa Rosa:  9.5% à 8.5%

·         Sonoma County cities of Sebastopol:  9.25% à 8.25%

·         Etc.

 

You will need to update the Sales Tax rates in QuickBooks and POS to reflect the increases for all sales tax districts that you service.  This is a simple change in QuickBooks and will need to be done either at the close of business on 6/30 or before your first sale on 7/1.  Instructions are noted below.

 

California does not require payment to each sales tax entity (state, county, city, etc.) so you only need to have a single sales tax rate in QuickBooks for each sales tax jurisdiction.  For example, if you are in San Francisco, you only need to track and pay the 8.5% (as of 7/1/2011) to the Board of Equalization. If you are using Sales Tax Groups in QuickBooks to break out to then there are additional steps required.

 

The steps to make this change are basically the same in all recent versions of QuickBooks and QuickBooks POS.  QuickBooks Online is a bit different and is noted as such below.

 

The first step is to do the necessary setup steps in QuickBooks financials.  If using POS, the 2nd step is to setup the sales tax in POS.  Lastly, on the eve of 6/30 or any time prior to open of business on the 1st, change the default sales tax rate.

 

 

1.       QuickBooks Financials Setup

a.       QuickBooks Desktop

                                                               i.      This process is the same for the PC and Mac versions of QuickBooks.  The screens look slightly different on the Mac but are basically the same

                                                             ii.      Create a new sales tax item for each city/county where your products are used. If you have a single location and do not ship/deliver products then you only need to have one sales tax item.  If you deliver to cities outside your store location(s) you will need to create one sales tax item for each, e.g. the sales tax rates samples noted above.

                                                            iii.      Sales tax items are created/edited via the Item List:  List \ Item List (or from the Home page)

                                                           iv.      Create a new item by clicking the Item pull down at the bottom left-hand side of the Item List and select New (or click Control-N or select New Item in the Edit menu):

 

 

                                                             v.      Enter a name for the new sales tax rate.  Making this different than what is currently being used to help differentiate on reports and help minimize confusion and potential data changes when there are different rates using the same sales tax item code.  If you are using QB POS, this field is the one you will reference in POS

                                                           vi.      Enter an appropriate description

                                                          vii.      Enter the new rate in the Tax Rate field

                                                        viii.      Enter the Tax Agency vendor you currently have setup to pay the sales tax – typically it is Board of Equalization

                                                           ix.      Add a new sales item for each sales tax district you service

                                                             x.      For those with multiple locations, you will need to setup a new sales tax item for each of your locations

 

b.      QuickBooks Online

                                                               i.      There is nothing to setup in advance

                                                             ii.      Changes are made sometime after close of business on 6/30 and start of business on 7/1.  Do not do before 7/1 else the new rate will be utilized

                                                            iii.      See #3 below

 

2.       QuickBooks POS Setup

a.       The sales tax rates are entered in Company Preferences:  Edit \ Preferences \ Company

b.      In Company Preferences, select Sales Tax in the lower left hand-side of the screen

 

 

c.       Create a new Sales Tax Location for each sales tax district you service by scrolling down the sales tax location list until the end of the list where you should see the button “Add Tax Location”.  Click this button. 

d.      For those with multiple stores, you will need to setup a new Sales Tax Location on the POS HQ machine for each of your store locations. The sales tax code will sync down to each of the stores during the next Store Exchange.

 

e.      Add the name of the new sales tax location.  It can be the same as the one you created in QB Financials or something similar (you will tell POS which QB Financials sales tax item to point to in a later step)

f.        Clicking OK will take you back to the Set up Sales Tax screen.  Here you will add the specific tax rate by clicking on the Edit Tax Code button on the row below the Sales Tax Location you just created:

 

g.       Here you will add the sales tax rate for this particular Sales Tax Location

 

 

h.      The first screen asks for entry of the Tax Code, Tax Code Name, and the Printed Mark.  You can accept the defaults of “Tax”, “Tax”, and “T”, respectively. Click Next

 

i.         On this screen you tell POS whether you are tracking single-rate tax, price-dependent single-rate tax, or multi-rate tax.  Select single-rate tax, which is the default.  In CA the 2nd option isn’t applicable.  If you are tracking multiple rates in POS then give us a call

j.        The third screen is where you define the rate and how POS should communicate with QuickBooks. 

                                                               i.      Enter the full tax rate, e.g. 8.5 for San Francisco.  Note:  you do not enter the % character – just the number

                                                             ii.      Enter the tax vendor that is setup in QuickBooks Financials, e.g. Board of Equalization.  Unfortunately, this is not a pull down menu so type carefully.  Still enter the tax vendor name, even if you are not integrating POS with QB Financials

                                                            iii.      In the “Assigned to QuickBooks Tax Item/Group” pull down, select the appropriate sales item you created in the QB Financials section above. Skip this step if you are not integrating POS and QuickBooks Financials

                                                           iv.      In the “Assigned to QuickBooks Tax Code” select “Tax”.  This should be the default.  Skip this step if you are not integrating POS and QuickBooks Financials

                                                             v.      Click Finish

k.       Edit the Tax Code for each Sales Tax Location created above

l.         Enter a Sales Receipt to verify the new rates - change the Sales Tax Location (I Want to / Select Sales Tax Location) and validate that the new rate is correct.  Do this for each Sales Tax Location

 

 

3.       On the morning of July 1st (or after close of business on the 30th), tell QuickBooks to use the new default rate.

a.       QuickBooks Financials (PC).  If you do not do invoicing in QB Financials and only do so in POS then you can skip this and go to the QuickBooks POS section below

                                                               i.      Switch to Single User mode

                                                             ii.      Navigate to the Preferences section via the Edit menu

                                                            iii.      Select Sales Tax in the left-hand side of the screen

                                                           iv.      Select the Company Preferences tab

 

 

                                                             v.      In the pull down, select the sales tax item that you will be using most often in QB Financials.  (The default QB POS sales tax code is defined below.)

                                                           vi.      Test by entering a new Invoice or Sales Receipt

 

 

b.      QuickBooks Financials (Mac).  If you do not do invoicing in QB Financials for the Mac you can skip this section.

                                                               i.      Navigate to the Preferences section via the QuickBooks menu

                                                             ii.      Select the Sales Tax preference

 

 

                                                            iii.      In the pull down, select the sales tax item that you will be using most often in QB Financials

                                                           iv.      Test by entering a new Invoice or Sales Receipt

 

 

c.       QuickBooks Online

                                                               i.      Sometime after close of business on the 30th and start of business on the 1st, change the default sales tax rate

                                                             ii.      The default sales tax rate is defined in Company \ Preferences \ Sales Form Entry \ Sales tax:

 

 

                                                            iii.      Change the rate on this screen and click Save.  This rate will now be the default sales tax rate

                                                           iv.      Test by adding a new invoice

                                                             v.      Unlike the desktop version, the sales tax rate can also be changed directly on the invoice as well; however, changing the default as above will minimize incorrect rate entries.

 

d.      QuickBooks POS

                                                               i.      The default sales tax rate is defined in Company Preferences:  Edit \ Preferences \ Company

                                                             ii.      In Company Preferences, select Sales Tax in the lower left hand-side of the screen

 

 

                                                            iii.      The default sales tax rate is defined at the bottom section of this screen.  Select the default sales tax rate in the “Default tax location for this store” pull down.

                                                           iv.      Click Save

                                                             v.      For a multi-store setup, do this for each of the stores after the Store Exchange

                                                           vi.      Test using a new Sales Receipt