Tips and Tutorials

Recently passed legislation increases the New Jersey sales and use tax rate from 6% to 7%. The rate change affects all retail sales of taxable merchandise or services that take place on and after July 15, 2006.

This tutorial can be used for any state sales tax change.

To set up a sales tax item and rate
Still in the Sales Tax Preferences window, click the “Most common sales tax” drop-down list and choose .

The New Item window opens with Sales Tax Item already selected in the Type drop-down list.

Enter a sales tax name.

Use a name that describes the location for the tax, such as “XYZ County.” This name appears as one of the choices in the Tax field on your sales forms.

Enter a description for the way this sales tax item will appear as a line item on your sales forms.

For example, “XYZ County sales tax.” The description prints on your sales forms after the final line item. You can’t edit it on the forms themselves. Users frequently use the name of the sales tax item as the description.

Enter the sales tax rate.

The percentage you enter is the rate you charge when a sale is taxable. For example, your sales tax rate for XYZ County might be 8.25% (or 8 and 1/4 cents per dollar purchased). This rate also appears on your sales forms.

In the Tax Agency drop-down list, select .

This will open the New Vendor window where you’ll set up the tax agency (a vendor) to which you pay this sales tax.

In the Vendor Name field, enter the name of your tax agency. For example, in California, sales tax is paid to the Board of Equalization.
You can enter the other information now, such as the address and opening balance, or you can do it later.

Click OK to close the New Vendor window.

Click OK to close the New Item window.

Repeat steps 1 through 9 for each sales tax item you need to set up for your business.

(If necessary) When you’re finished setting up all of your sales tax items, set up your sales tax group items.

Click the “Most common sales tax” drop-down list and choose .

In the New Item window, click the Type drop-down list and choose Sales Tax Group Item.

Enter a name and description for the group, similar to the way you named and described the individual sales tax items.

In the table at the bottom of the window, select the Tax Item column drop-down list, and choose the first sales tax item for this group item. Repeat this step for each sales tax item that is part of this sales tax group item.

When you’re finished adding sales tax items to the table, click OK.

Repeat steps a through e for each sales tax group item you need to set up.

When you’re finished setting up all of your sales tax items, click the “Most common sales tax” drop-down list again and choose the sales tax item that you use most frequently for your sales. Your choice will be used as the default sales tax item and rate on all of your sales forms. If necessary, you can change this setting for any particular sale.

In the Sales Tax preferences window, decide whether or not you want to mark your taxable items with a “T” when your sales forms are printed. If not, clear this checkbox. Many businesses prefer to show which items are taxable and which are not on their invoices and sales receipts, but the choice is really up to you.

Click OK to apply your sales tax preferences.

If you already set up your items and customers, you’ll be prompted to assign a taxable sales tax code to all of them. Click OK if most of your items and customers are taxable. If most of your items or customers aren’t taxable, clear the appropriate checkboxes and then click OK. Later, if necessary, you can change the sales tax code for those items and customers that don’t match the setting you chose.