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Chapter 14. Collecting and Paying Sales Tax > Understanding How Sales Tax Works

Understanding How Sales Tax Works

If you sell items at retail and the items you sell qualify for sales tax, you are expected to collect sales tax from your customers at the time of the sale.

In QuickBooks, you can set up a sales tax item with a fixed percent so that QuickBooks can calculate the sales tax for you and make the assessment on your invoice. You have the capability to set up more than one sales tax item, so if you sell in different locations—each with its own sales tax rate and taxing authority—QuickBooks tracks the amount of sales tax you owe to each government agency. If you are required to charge different rates of sales tax for different types of sales, you can set up a separate item for each rate, and then choose the applicable rate on your invoice form.


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