QuickBooks Automated Sales Tax

You can set up and use the QuickBooks automated sales tax feature present in the QB Payroll in order to save time spent on calculating taxes and allocate it towards more productive tasks. This can boost your workflow and have a positive impact on your business progress. In this blog, we’ll cover how you can set up and use the QB automated sales tax without any issues. First, let us see how to set up sales tax in the QuickBooks Online website.

Are you having trouble setting up your sales tax in QuickBooks? Contact our experts at 1-855-888-3080 today to resolve your issue in no time!

Table of Contents

Comprehensive Steps to Set Up and Use the Sales Tax in QuickBooks Online

Given below are the steps you can use to set up and implement the sales tax features in QuickBooks Online:

Step 1: Understand the Tax Calculation Procedure for QuickBooks Online

The total tax rate for each sale can vary depending on various key factors. The factors you need to know are:

The location where you sell or ship
Your product or service’s tax category
The tax exempt status of your customer

Step 2: Feed Where You Collect Tax in QB Online

The QB Online website tracks the tax on all your transactions to calculate your taxes and returns accurately. To set up QuickBooks automated sales tax, first, follow the steps given below to set up sales tax:

Select Set up tax
Feed in the Tax Name
Then, type in the Description
The Tax Agency Name would fill up automatically depending on the Tax Name you enter
- You have the option to change it if you wish to
Now, type in your Business ID No.
- This is optional
Then, fill in the Start of current tax period and Filing frequency from their dropdown menus
Proceed to select your Reporting Method
Enter the Sales rate
- This is optional
You can also enter a Purchase rate if you collect this tax on purchases
- You can mark the checkbox if the Purchase tax is reclaimable
Click on Next
Hit OK

You can also add the customer tax rates if you want to.

Step 3: Assign the Product’s Tax category

You can assign a tax category to a product using the steps given below:

Find the item you wish to assign a tax category to
Click on Edit
Then, proceed to click on the Tax dropdown menu
Locate and select the specific tax that fits your product
Now, choose if you wish to add an inventory item or a non-inventory service
Then, save the item

Step 4: Start Tracking Tax from Your Customers

You can start tracking taxes from your customers by following the steps given to you below:

First, create an invoice or a sales receipt by following the steps to do so
Then, make sure the location of the sale is correct
If you ship ordered items, you should add the following information:
- Shipping to
- Ship via
- Shipping date
- Tracking no.
Go to the Tax column
Check the taxable items
Select Save and send

This should complete the sales tax setup in QB Online. Now, let us see the steps to set up QuickBooks automated sales tax.

Turn On Automated Sales Tax in QuickBooks Online With Guided Steps

When you turn on automated sales tax in QuickBooks Online, you will be asked to match your existing tax rates to official tax agency rates listed in QB. If you have fewer than 20 tax rates, you should proceed to match all your rates and then follow the steps given below to set up the automated sales tax in QBO:

Proceed to click on Use automated sales tax
- Or Get Started
Check if the business address is correct
If the address is correct, click on Next
- If it isn’t, select the pencil icon and update the address, and then click on Next
Then, you can match the existing rates with the official state agency in one of the following ways:
- Match one rate at a time: You should use this if you only have a few rates. Click on the OFFICIAL AGENCY NAME dropdown to search for and choose the correct tax agency for every rate.
  - Ensure that it matches with the tax agency under the YOUR AGENCY NAME column
- Match multiple rates at once: You should use this if you want to match multiple rates with the same agency. Mark each tax rate you wish to bulk match, and go to the Bulk Matching window
  - Click on the Official Agency dropdown menu, and choose the correct tax agency
  - Then, click on Apply
Hit Next
Select the rates
Press Save
Click on X to close the window

Now, the QuickBooks automated sales tax should be set up.

Resolve Calculation Errors With the QuickBooks Online Automated Sales Tax

You can face problems with the QB automated sales tax, such as an incorrect calculation or an incorrect tax rate. This can be annoying as it can hamper your workflow and important business processes. You can follow the methods below to resolve the calculation errors with automated sales tax in QB Online:

Check the Sales Tax Transaction

Select Find report by name
Then, locate and open the Transaction List by Date report
Press Filter
Move to the Last Modified Date
Feed in your Custom dates
- For example: 08/01/2025 to 08/02/2025
Click on Save to run the report

Ensure that Your Sales Tax is Accurate

Choose each transaction to open it
Click on See the math
The How your sales tax is calculated window would open
Select Close
Click on Save to recalculate your sales tax

Now, the QB automated sales tax rounding errors should be resolved.

QuickBooks Automated Sales Tax – A Quick View Table

Given in the table below is a concise summary of this blog on the topic of the automated sales tax in QuickBooks Online:

Description	The QuickBooks Automated Sales Tax feature can automatically calculate your sales tax, reducing your workload. This can help boost your workflow, as you can allocate more time to productive processes and have a major impact on your business progress.
Set up sales tax in QB	Understand the tax calculation procedure for QuickBooks Online, feed where you collect tax in QB Online, assign the product’s tax category, and start tracking tax from your customers.
Set up automated sales tax in QB	First, click on Use Automated Sales Tax, then proceed to verify your business address, select Next, choose between the two rate matching options, and select Save.
Resolve any calculation errors in QB automated sales tax	Check the sales tax transaction and ensure that your sales tax is accurate.

Conclusion

You can set up the QuickBooks automated sales tax and cut down the time spent, and then allocate it towards more productive processes. This can boost your workflow and have a positive impact on your business progress. We have covered the steps you can use to set up sales tax and automated sales tax in QuickBooks in this blog. If you are facing any problems while setting up automated sales tax in QuickBooks Online, feel free to contact our experts at 1-855-888-3080 today, who can patch your issue at a moment’s notice.

FAQs

How can I turn off automated sales tax in QuickBooks Online?

You can turn off automated sales tax in QuickBooks Online by following the steps given below:
– Navigate to the Taxes menu
– Then, click on Sales tax
– Now, press the Sales Tax Settings button
– Click on Turn off sales tax
– Select Yes to confirm
This should now turn off your automated sales on the QB Online website.

How do I set up and use automated sales tax in QuickBooks Online?

You can set up and use automated sales tax in QuickBooks Online by following the steps given below:
– Click on Use Automated Sales Tax
– Check your business address
– Proceed to click on Next
– Select between these two options:
a) Match one rate at a time
b) Match multiple rates at once
– Press Next
– Choose the rates
– Hit Save
Performing these steps would set up the automated sales tax feature in QuickBooks Online for use.

Can I use automated sales tax in QuickBooks Desktop?

No, you don’t get the option to set up or use automated sales tax in QuickBooks Desktop or Enterprise.

QuickBooks Automated Sales Tax | A Complete Guide