If you charge your customers sales tax, you must report and pay the sales tax to the state(s) on either a monthly, quarterly or yearly basis. The frequency that you pay taxes depends on your volume and the rules set by the states(s) you are collecting sales tax for.
Some companies pay their sales tax based on Sales. This means that you pay the sales tax based on the period you charged the sales tax to your customers. Other companies pay their sales tax based on cash receipts. If you are paying based on cash receipts, you do not have to pay the sales tax until you are paid by your customer.
Sales Tax Based On Sales
There are two reports that should be generated for the period you paying sales tax. The Sales Journal Tax Report and the Cash Receipts Tax Report – Summary Only.
Sales Journal Tax Report – This is located in Accounts Receivable System, Accounts Receivable Reports, Sales Journals, Tax Reports , Sales Journal Tax Report.
This report will print a listing for every tax authority. It will include a column for Total Sales, Merchandise Sales and Sales Tax Charged. It will also list separately Freight and any Miscellaneous Charges that are not normally included in Sales.
This is the information needed to fill out your Sales & Use Tax Return for each state.
The Numbers presented on this report will tie out directly with a Sales Journal by Date for the same period.
If you have Customers that have made deductions of Sales Tax you will also need to print the second report that will give you a total for adjustments you make to your Sales Tax Payable G/L Account for the same period. This is the Cash Receipts Tax Report. You will only need to summarize this report so that you can obtain the total amount of adjustments made to your Sales Tax Payable G/L account.
This report is located in Accounts Receivable, Accounts Receivable Reports, Cash Receipts Reports, Cash Receipts Tax Report. You should select the date range for the period you are paying sales tax for, and answer Yes to Summarize. This will give you a summary of all deductions made during Cash Receipts. You must then reduce your sales that you are reporting based on the amount that was deducted through Cash Receipts.
Sales Based on Cash Receipts
If you are paying Sales Tax based on Cash Receipts, meaning you do not pay the sales tax until you are paid by your customers, you only need to run the Cash Receipt Tax Report. This should be run for the period that you are reporting sales tax. This report will present each Customer along with the detailed invoice payment information. A summary for each customer will subtotal the sales tax paid by tax authority. The last page of this report will summarize all of the tax authorities. Totals will be given for Cash Received, Sales Amount and Sales Tax paid.
Deductions will also be summarized on the bottom of the report. If deductions have been made to sales tax, the totals by tax authority must be adjusted to support the actual tax paid by your customers.
This report is located in
Accounts Receivable
Accounts Receivable Reports
Cash Receipts Reports
Cash Receipts Tax Report