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Handling U.S. Ecommerce Tax in QuickBooks Online

Last updated 08/01/2021

How to handle U.S. taxes on ecommerce and marketplace orders with QuickBooks Online.

Overview


Ecommerce tax can be complicated, especially when you have to handle multiple states and counties across multiple sales channels. To make things easy, Cin7 has a special feature that allows you to preserve the fidelity of tax calculated on orders imported from integrated channels.

In order for this to work, you must meet the following prerequisites:

  • Your business must be based in the United States.
  • Your QuickBooks Online account is integrated with Cin7.
  • Taxes are set up correctly in your ecommerce software - you've probably done this already.
  • Have specific tax liability accounts set up in your QuickBooks Online account.
  • You have created a service in QuickBooks Online and linked it to your tax liability account.
  • It is also likely that you will use a separate tax filing/reporting automation software to ultimately figure out what you owe and to whom.

Setting Up Ecommerce Taxes


To set this up:

  1. Log in to Cin7 as an administrator.
  2. Whilst logged in as an Administrator, from the left navigation, click Accounting, then  QuickBooks Online.
  3. From right, Click the gear Icon.
  4. Click Settings.
  5. In the Settings tab, select the checkbox next to Upload Ecommerce Taxes Into Liability Account (U.S. Only).
  6. Click on the Automatically Create Deposit Accounts & Service Products link.

Using this Feature


When an order is downloaded, the tax will be correctly preserved based on the ecommerce or marketplace's calculation. The appropriate tax will appear in the Alternative Tax Rate field in the Sales Order. The tax amount will be considered when calculating the total of the order.

Upon importing the order to QuickBooks Online, the tax will be split and posted to the specified liability account.

Modifying Tax Rates

Please note that if you modify a tax rate in the Alternative Tax Rate field at any stage and save the transaction, you will not be able to recreate the unique tax rate.  Please modify this field with care!