This article describes tax calculations and the procedure for editing tax rates in QuickBooks Online to work with Autotask PSA. Use this article as a reference for tax questions in QuickBooks Online or Autotask PSA.
- Autotask PSA
- QuickBooks Online (QBO)
Editing tax rates in QuickBooks Online
To edit tax rates in QuickBooks Online:
1. Open QuickBooks and select Taxes from the navigation menu.
2. Under Related Tasks, select Add/edit tax rates and agencies.
Figure 2: The Add/Edit Tax Rates and Agencies screen (click to enlarge)
3. Select the tax rate you want to edit, then click Edit.
Figure 3: Editing Sales Tax Rates and Agencies (click to enlarge)
4. From the index below, select the appropriate category to continue:
- US customers, Automated Sales Tax not enabled
- US customers, Automated Sales Tax enabled
- Non-US customers
US customers, Automated Sales Tax not enabled
QuickBooks Online applies one aggregate tax rate to the entire invoice, instead of breaking out the taxes line by line as in Autotask PSA.
- A tax region in Autotask PSA called 'State Tax' has tax categories of Tax 1 at 2% and Tax 2 at 3%, making the total tax for the region 5%.
- You have a combined tax rate in QuickBooks Online called State Tax, with components Tax 1 at 2% and Tax 2 at 3%, making the total tax rate also 5%.
- If you create an invoice with two billing items at $100 each, with Tax 1 applied to Billing Item 1, and Tax 2 applied to Billing Item 2, the tax would apply to each line item in Autotask PSA.
- Billing Item 1 is taxed $2, and Billing Item 2 is taxed $3. In Autotask PSA, the tax total would be $5.
- When the invoice transfers from Autotask PSA, QuickBooks Online looks at the tax region for the Autotask PSAaccount to know what tax rate to apply. It then uses the aggregate tax amount as the tax rate in QuickBooks Online.
- The invoice, once transferred to QuickBooks Online, would show a total tax of $10 as it is applying the 5% tax rate total to the invoice as opposed to 2% and 3% to the respective individual items.
Autotask PSA Invoice
Item one = $100: Tax cat 2% - Tax = $2 - Total for Item is $102
Item two = $100: Tax cat 3% - Tax = $3 - Total for Item is $103
Total for invoice = $205
QuickBooks Online Invoice
Item one = $100: Line total $100
Item two = $100: Line total $100
Subtotal = $200
Taxes 5% = $5
Total for invoice = $205
US customers, Automated Sales Tax enabled
When you enable AST, the system creates QuickBooks online invoices with a Shipping address, located below the Billing address. AST uses the invoice shipping address, in combination with your company's address (as specified in the QuickBooks Company settings), to determine the applicable sales tax amounts, if any.
If Automated Sales Tax (AST) is enabled in QuickBooks Online, its use is optional.
- If you choose to use AST, you must select the desired address to be used for tax calculation in the Autotask PSA Invoices app settings.
- The application uses the chosen address setting to determine the tax location and automatically calculate the tax.
Tax rate determination
QuickBooks Online applies a single tax rate to each invoice line. To determine the tax rate, the application:
- looks at the Autotask PSA account's tax region.
- looks at the Autotask PSA billing codes of each of the line items on the invoice.
- combines the tax region from the account and the tax category from the billing codes.
Matching tax rates to invoice lines
Only one tax rate can match a line in QuickBooks Online. Autotask PSA allows more than one tax rate to apply to any given invoice line. For example, in Canada, some users may set up a Goods and Services Tax (GST) tax rate and a separate province tax rate. Only one of these tax rates can assign to a line in QuickBooks Online.
To mitigate this single tax rate limitation, we recommend creating an aggregate tax rate in Autotask PSA that represents GST, plus the applicable province tax, for each province. See the below graphic for more information.
Autotask Invoices to QuickBooks Online setup (Autotask PSA Online Help)