If you collect sales tax in your business, or if you operate outside the US, there are a few tax-related items you will need to set up in order for your QuickBooks integration to work smoothly.
Import Your QuickBooks Tax Codes
When you connected QuickBooks to Dubsado, you should have imported your tax codes. Here's a review, just in case!
⚠️ Heads up! Set up your sales tax in QuickBooks first. Check out this article from QuickBooks on how to set up your sales tax.
To import your tax codes:
- Go to Settings >> Integrations >> QuickBooks.
- Scroll down to the QuickBooks Online tax codes section.
- Click in the drop down box.
- Click on all tax codes that apply to your business.
When finished, you should see the imported tax codes listed in this section:
After importing your tax codes, go to Reporting >> Chart of Accounts. You'll see that Dubsado has created taxes to match the tax codes imported from Quickbooks. In some cases, the final tax rate is actually made up of taxes from multiple agencies, and you'll see those broken out into separate taxes in Dubsado.
For example, in Burbank, California, USA, our sales tax of 10.25% is made up of taxes from four different agencies, so Dubsado created four new taxes in the account.
If you have been invoicing through Dubsado for a while without Quickbooks connected, you may have already created Dubsado taxes. Invoices with these taxes applied will NOT be able to sync with Quickbooks.
👋 Here's a tip... You may want to re-name any taxes you created in Dubsado so that you can tell them apart from the taxes created by Quickbooks. Just click on the gear icon next to the tax to re-name it. Do not edit the taxes created by Quickbooks.
Tax for US vs. Non-US QuickBooks Accounts
Taxes are handled a little differently when your QuickBooks account is based in the US vs. non-US. If you're not sure which location applies to you, go to your Settings >> Integrations >> QuickBooks and look at what is shown at the top for the location.
Taxes for QuickBooks Location: US
If your Quickbooks location is "US," you only need to add tax to line items that are taxable. Any line items that are non-taxable do not need to have taxes added.
Taxes for QuickBooks Location: Non-US
If your Quickbooks location is "non-US" you will need to specify a tax on every single line item of your invoices, even if you never charge any taxes. If any line items are missing a tax, the invoice will not sync.
Please consult with your accountant on when to use Out of Scope vs. a tax-exempt code.
Apply QuickBooks Tax to Your Packages
In order for a Dubsado invoice to sync with Quickbooks, any tax on that invoice must be a Dubsado tax that was created by Quickbooks. Applying taxes you created from scratch in Dubsado will cause a syncing error.
Applying the Quickbooks taxes to your package line items will ensure the correct tax is applied to new invoices going forward, whether you manually add that package to an invoice or your client selects it on a proposal.
To add tax to a line item in a package:
- Open a package template to edit.
- Click on the dropdown arrow for a line item where tax is charged.
- Remove any existing taxes you had set by clicking on the X next to each tax.
- In the TAX section, click Select tax if applicable and select ALL of the taxes associated with the QuickBooks tax code you are using. If your tax code created four new taxes in Dubsado, you must select all four!
- Click Save Item.
- If the package is used in any proposals, you'll see an alert asking if you'd like to update related proposals. Click Update templates so that the changes are applied to your proposals.
- Repeat this process with all line items in all packages where tax needs to be applied. Remember if you have a non-US QuickBooks account, you will need to do this for every line item in all of your packages!
⛔ Warning: Do not click New Tax Item when you are applying taxes. This will create a new Dubsado tax, which is not compatible with QuickBooks. Keep clicking in the tax area to select existing taxes created by QuickBooks from the dropdown.
Applying QuickBooks Tax to Invoices
QuickBooks tax codes can also be applied manually to an invoice. This is helpful if you are trying to sync an existing invoice with QuickBooks and you are getting an Error status. The invoice will not be able to sync without the proper tax applied.
To quickly apply one tax to the entire invoice, open the invoice and use the QuickBooks Tax Code dropdown to apply the appropriate tax. This will override all taxes currently applied on your invoice.
If some line items are taxable and others are not, you will need to edit each line item to apply the appropriate taxes.