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QuickBooks and tax in Dubsado
QuickBooks and tax in Dubsado

If you collect sales tax or use a non-US version of QuickBooks, don't miss this article.

Sam Gioia avatar
Written by Sam Gioia
Updated over a week ago

Updated Sep 4, 2023

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 QuickBooks tax codes

When you connected QuickBooks to Dubsado, you should have imported your tax codes. If you didn't, read the instructions below on how to import your tax codes to Dubsado:

  1. Go to Settings > Integrations > QuickBooks.

  2. Scroll down to the QuickBooks Online tax codes section.

  3. Click the dropdown.

  4. Select all tax codes that apply to your business. If you don’t see any tax codes, you may have not set up your taxes in QuickBooks. Check out this QuickBooks article on how to set up your sales tax.

When finished, all the imported tax codes will be listed.

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. This article covers applying the new taxes to your packages and invoices.

We recommend renaming 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 rename it, but don’t edit the taxes created by QuickBooks.

Tax for US vs non-US QuickBooks accounts

Taxes are handled differently based on the location of your QuickBooks account. If you're not sure which location applies to you, go to Settings > Integrations > QuickBooks and look at what is shown at the top for the location.

Taxes for US QuickBooks Locations

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 non-US QuickBooks Locations

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.

All invoices in Dubsado are tax-exclusive. This means that tax is added to each invoice line item. Even if you use tax-inclusive invoices in QuickBooks, invoices from Dubsado will still be tax-exclusive.

Apply QuickBooks tax to 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:

  1. Go to Templates > Packages and open a package.

  2. To edit a specific line item where tax is charged, click on the down arrow > Edit.

  3. Under Tax, remove any existing taxes you had set by clicking on the X next to each tax.

  4. To add tax, click Select tax if applicable. A dropdown will appear.

  5. Select all of the taxes associated with the QuickBooks tax code you are using — even if your tax code created four new taxes in Dubsado, you must select all four!

  6. Click Save Item.

  7. 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!

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.

Apply 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 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 to the invoice.

If some line items are taxable and others are not, you will need to edit each line item to apply the appropriate QuickBooks taxes.

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