How To Set Up Sales Tax In QuickBooks Pro

I’m sure you’re probably itching to send your first invoice with your new QuickBooks Pro software, but you can’t accurately charge your customers without sales tax. (And you can’t be on the good side of the government without having accurate sales tax records.)

In QuickBooks Pro, there are two different ways of creating sales tax rates within the software: sales tax items and sales tax groups. We’ll explain how to add both a sales tax item and a sales tax rate step by step.

If you need help deciding whether to use sales tax items or sales tax groups, read our post on Sales Tax Items vs. Sales Tax Groups in QuickBooks Pro, or continue on to learn how to start collecting sales tax in no time.

Add A Sales Tax Item

Now that you know the difference between sales tax items and groups, we’ll teach you how to create them using your QuickBooks software.

To begin adding a sales tax item, go to Edit>Preferences>Sales Tax>Company Preferences.

Step 1: Enable Sales Tax

Before you can add a Sales Tax Item, you’ll need to make sure your company is set up to collect sales tax.

QuickBooks Pro will ask you the question, “Do you charge sales tax?” Make sure “Yes” is selected.

Step 2: Add A New Sales Tax Item

Click the “Add sales tax item…” box.

You’ll be taken to a screen that looks like this:

Make sure the “Sales Tax Item” is checked.

Step 3: Create A Sales Tax Name

Create a name for you Sales Tax Item.

Step 4: Write A Sales Tax Description

Customize your sales tax description.

Step 5: Add A Tax Rate

Add the appropriate sales tax percentage rate. If you need help determining what this rate should be, refer to our Small Business Sales Tax Guide.

Step 6: Select The Tax Agency

Use the drop-down menu to select the appropriate sales tax agency. The sales tax agency is the legal entity for which you collect sales tax. If you need help finding the right sales tax agency, refer to our Small Business Sales Tax Guide.

You most likely will need to create a brand new vendor for your tax agency. You can do so by clicking “<Add New>.” Then, fill in the appropriate information and press “OK” to save your new tax agency.

Step 7: Save Your Sales Tax Item

Click the blue “OK” button to save your sales tax item.

Congratulations! You’ve created your first sales tax item. Repeat the process as many times as needed to get all of your sales tax rates added to QuickBooks.

Add A Sales Tax Group

Before you add a sales tax group, you’ll need to create the individual components of the sales tax group as sales tax items. Follow the “How To Add A Sales Item” instructions.

To begin adding a sales tax group, go to Edit>Preferences>Sales Tax>Company Preferences.

Step 1: Add A New Sales Tax Group

Begin by clicking the “Add sales tax item…”

You’ll be taken to a screen that looks like this:

Click the “Sales Tax Group” option.

Step 2: Create A Group Name Or Number

Create a name for your Sales Tax Group.

Step 3: Write A Description

Customize your sales tax group description.

Step 4: Select The Appropriate Tax Items

Now, you’ll need to add all of the individual Sales Tax Items that make up your combined Sales Tax Group by using the drop-down menu under Tax Item. If you need help determining which rate you need to include, refer to our Small Business Sales Tax Guide.

Step 5: Save Your Sales Tax Group

Click the blue “OK” button to save your sales tax group.

Repeat this process until all of your sales tax rates are successfully created, and you’re in business (literally). Once you’ve added your sales tax rates you can begin creating invoices and running your business!

If you have any troubleshooting issues, check out the QuickBooks Community or call QuickBooks directly. Or, if you want to learn more about sales tax, read our complete Small Business Sales Tax Guide. And as always, if you have any further questions, leave a comment below and we’ll do our best to help you.

Don’t forget to check out the rest of our QuickBooks Desktop Pro 101 Series to learn how to create invoices, customize invoices, run sales tax reports, and more.

Overwhelmed by QuickBooks Pro? Maybe it’s time to switch to QuickBooks Online. QBO is easy to use, cloud-based, and affordable. Best of all, you can easily import your QuickBooks Desktop data into QuickBooks Online. Check out our full review on QuickBooks Online for more details.

Outgrown QuickBooks Pro? Switch to QuickBooks Premier. It’s the same QuickBooks Desktop software you love but with more users and advanced, industry-specific features, which we cover in our QuickBooks Premier review.