Every year hundreds upon thousands of small businesses close their doors. Sometimes it is due to competition, bad marketing or bad guacamole. Many other times, however, it is due to one simple inevitability: inability or failure to pay taxes. Wherever you are - and whether you file monthly, quarterly or yearly - we'd like to help. Commerce Sync addresses a key pain point of small businesses by automating the transfer of sales tax information into QuickBooks and Xero.
Setup and transfer
Configuring Commerce Sync to transfer sales tax into QuickBooks (both Online and Desktop) is easy.
- Step one: Setup Tax Rates in your point of sale solution (POS).
- Step two: Enable Sales Tax in QuickBooks and ensure all of the Tax Rates that exist in your POS also exist in QuickBooks. For example, a coffeehouse in Denver collecting the standard 7.62% state sales tax would create a corresponding 7.62% rate in QuickBooks.
That's it. During activation, Commerce Sync detects whether sales tax is turned on in your QuickBooks account, and if it is, we enable sales tax transfer automatically. (If you do not wish to transfer sales tax, for whatever reason, you can turn it off later in the Commerce Sync Dashboard.) When your sales are transferred, whether as a daily summary or individual sales, the appropriate rate is applied, with the tax amount you collected ultimately appearing as a Liability in your Chart of Accounts.
If you forget to setup a tax rate in QuickBooks before transferring sales, your information is not lost. We hold onto it until you've had a chance to fix things, whereupon we can resubmit it for you - or let you do it yourself.
Set up for Xero is even easier - there is none! Sales tax is always "on" in Xero, and Commerce Sync creates any rates that don't already exist in Xero during sales information transfer.
Often times, sales tax rate applied at the POS is not just one rate, but a combination of State, Local and other rates. The 7.62% of Denver, for example, is broken into:
- 2.9% State Use Tax
- 3.62% City / County
- 1.1% transportation / cultural
Rather than setup a single 7.62% rate in QuickBooks or Xero, a Denver business may put 2.9%, 3.62% and 1.1% components into a combined 7.62% rate. Sales tax transferred from the POS using this rate is automatically split into the correct Liability entries in the Chart of Accounts, one for each sub-component.
QuickBooks and Tax Offset
Occasionally, the sales tax amount collected at the POS does not match that expected by QuickBooks. This could be due to an override or rounding that occurs as a part of the Daily Summary transfer. Here, Commerce Sync introduces the concept of tax offset. If there is a difference between expected and actual Sales Tax collected, Commerce Sync enters this into a separate "offset" Liability account. This way, all liabilities are reported with pinpoint accuracy at the end of the day, week, month and tax year.
Tax offset is calculated automatically by Commerce Sync and does not require any further setup. This is particularly crucial for QuickBooks, which performs its own calculation of expected liability based upon the applicable rate, and doesn't allow you to override that amount.
Currently, Commerce Sync only supports a single tax rate per Daily Summary or Individual Sale, mirroring that supported by QuickBooks. Restaurants, for example, may have different tax rates for food and beverage. Certain Denver businesses may levy both the combined 7.62% and the single 2.9% use tax on a single sale.
The good news is that Commerce Sync is working to support multiple rates per sale for Xero. Expect this sometime in April 2015 - when many of us are worrying about our own taxes. So sign up today for Commerce Sync to gain control of your taxes!