QuickBooks Online (Intuit) has recently made its Automated Sales Tax (AST) feature an automatic setting for new QBO users. It automatically calculates tax rates based on the location on an invoice. Because we don’t initiate the integration until an invoice is sent to QBO, it may cause tax rate discrepancies in your QBO account. Below is a brief explanation and steps to resolve any residual discrepancies. Please note, not everyone has this feature activated on their account. The easiest way to tell if you have this feature activated is to check if you are able to create your tax rates in QBO. If you are not able to create tax rates, this feature is activated in your account.
For accounts that do not have the Automated Sales Tax feature turned on, you will create tax rates in Housecall Pro that are identical to the tax rates in Quickbooks Online. When you add the appropriate tax rates to a job in Housecall Pro, that tax rate will automatically link to your corresponding QBO tax rate and the invoice will push to QBO as is. QBO makes no changes to that invoice unless an update is made in Housecall Pro.
Automated Sales Tax feature changes:
With the Automated Sales Tax feature activated, QBO checks the job address and automatically assigns the sales tax for that location. There is no place to manually create tax rates in QBO. Instead, it requires you to enter your business address and add in the correct tax agency. It calculates the rest.
What this means:
If Quickbooks Online determines that you've applied the incorrect sales tax for a job created in HCP, QBO will then overwrite the rate you’ve chosen with the "correct" tax rate, based on their Automated Sales Tax calculator. This will adjust the amount on the invoice in QBO.
If the Automated Sales Tax rate is higher than the one applied (and the invoice has been paid for in HCP), it will show an outstanding balance in QBO. If the Automated Sales Tax rate is lower than the one applied (and the invoice has been paid for in HCP), it will show a credit on that customer's account in QBO.
If you believe that Quickbooks Online is forcing you to use a tax rate that is incorrect, you must contact Quickbooks Online. The only way to get the feature turned off is to prove that there is a flaw. You can take the guesswork out by using their sales tax calculator.
If the invoice HAS NOT been paid for:
- You can change the tax rate to the rate that QBO is suggesting on the invoice in Housecall Pro before resending it to the customer.
If the invoice HAS already been paid for:
- You can override the Automated Sales Tax rate on transactions within your QBO account. Once you override, there should no longer be a discrepancy between Housecall Pro and QBO.
To override the Automated Sales Tax rate:
1. Open the invoice detail page in your QuickBooks Online account.
2. Click the blue ‘Sales Tax’ link below the subtotal.
3. On the screen pop-out, click 'Override this amount in the bottom right'.
4. Enter the dollar amount or percentage you wish to use as the tax rate, select a reason from the drop down, then click 'Confirm'.