US sales tax

# US sales tax

Sales tax is set by each state, and often by city and county too. The rules are not the same everywhere. Check your state's revenue department before you start collecting.

Do you have to collect?

• You generally collect when you have a physical presence in a state, such as an office, staff or stock there.
• Many states also require collection once your sales into the state pass a set amount or number of transactions. This is called economic nexus. The amounts vary by state and change over time.
• Ask your accountant if you sell into several states.

Rates

Rates differ by state and by locality, and they change. Look up the current rate on your state's revenue website. Pop Books does not look up rates for you. Pop Books doesn't offer a rate lookup through a partner.

Recording tax on an invoice

1. Choose the tax rate on each line of the invoice.
2. The tax is posted to the sales tax payable account. If you haven't set that account, choose it first in the chart of accounts.
3. Tax you pay on your own purchases is recorded to the sales tax receivable account, so it can be offset.

The sales tax worksheet

The worksheet covers a period you choose and lists:

1. Gross sales
2. Taxable sales
3. Tax collected
4. Tax paid on purchases
5. Net tax due (line 3 less line 4)

Below the lines, the worksheet groups tax by rate and tax account. It does not split the tax by state or city yet.

Filing

Your state sets how often you file: monthly, quarterly or yearly, usually based on how much tax you collect. Pop Books does not file sales tax returns yet. Use the worksheet to copy the figures into your state's return, and ask your accountant if you are unsure which periods apply.