In this episode of the Mission Business Podcast, we talk about a little bit deeper way to use QuickBooks that’s going to make managing the various tax obligations of your business much easier.
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Interviewer: What we’re going to talk about today is a little bit deeper way to use QuickBooks that you may not already be aware of. This is going to make managing the various tax obligations of your business easier.
QuickBooks can obviously be used to keep track of different records of your business and a range of other things, but it can also be used to keep track of your tax obligations throughout the year. That’s what we’re going to talk through with Bernard today.
QuickBooks Makes Tax Tracking and Filing Much Easier
Interviewer: Bernard, can you share with me your experience in working with clients and whether you see most of your clients actually using the tax features that we’re going to talk about today? Is it pretty well known?
Bernard: My observation is that many clients do forget that they can use QuickBooks to make their tax tracking and tax filing much easier for them and the other information that is required for tax compliance. Many of them just rely too much, I believe, on their CPAs who will do taxes, but don’t have all the information.
So, it’s not just possible, it’s much more efficient to use QuickBooks to;
- Track taxes such as assessing your potential income tax liability,
- Sales taxes, and
- If you produce payroll yourself, payroll taxes
There are a number of features in QuickBooks that are convenient to use. Many of our clients forget to use those features, or they are not even aware that these features are available.
How QuickBooks Payroll Software Works
Interviewer: You mentioned a couple of different features. Obviously, taxes are a very broad topic. Let’s talk about payroll taxes in particular. How can QuickBooks be used to make sure you’re staying up-to-date with your payroll tax obligations?
Bernard: If you would be doing payroll taxes and payroll in QuickBooks, there is an initial setup whereby;
- You will set up the type of taxes you have to pay
- The frequency, and
- How you will be paying those taxes
Once this is set up, QuickBooks will automatically accumulate those taxes. As you run payroll, it will actually enable you to set up a payroll schedule.
- You will have a payroll dashboard that will show you what taxes are payable to what agencies and when.
- You would simply look at the dashboard, see when things are due, and you can click on various tax liabilities and pay that electronically through QuickBooks.
- At any moment you can look at your payroll and tax liabilities and figure out what you owe when and the same also for tax filings.
I think Intuit did a great job for their payroll software.
- It’s inexpensive
- It’s easy to use
Frankly, many of our clients are doing payroll themselves, and that works pretty well for them.
Managing Sales Tax Obligations Using QuickBooks
Interviewer: You also mentioned sales taxes. Explain to me how a company that sells products, for example, and that are going to actually have sales tax involved, use QuickBooks to stay on top of that even if they’re doing a lot of sales?
Bernard: When you have customers and you sell them something, you have to send them an invoice. At the bottom of this invoice you can figure the invoice to calculate the sales taxes due on that particular invoice. Certain products are taxable. Others are not. Certain customers are taxable. Others are exempt.
- QuickBooks is doing the work underneath as you produce those invoices.
- It accumulates the sales tax balances that you owe to the agencies.
- You may have local taxes to city taxes. You may have state taxes. You may have different types of taxes, county taxes.
The challenge is to set this up correctly at the start so that when it’s time to file taxes, once again, you have everything ready.
- You go to that particular menu option in QuickBooks,
- QuickBooks will present you with the Dashboard of whatever taxes are available to home. At that point, you can just produce the checks.
- You produce another report that enables you to have the filing information so that you can go to your state or local district’s website to file your sales tax return electronically.
QuickBooks is really a great help. It helps keep things in order, streamlined, so you don’t have to say, “Oh, my sales tax return is due. How do I get the data?” It’s right there in front of you as long as you keep current with your QuickBooks.
Interviewer: With sales tax and with payroll taxes, it sounds like if you’ve gone through the setup process, then QuickBooks is really good at managing that.
Start Using QuickBooks for Payroll and Sales Taxes
Interviewer: What would you recommend doing if somebody wants to move into using QuickBooks for payroll and for managing sales taxes, but they already have a lot of data in place from earlier in the year or from the previous year? Would you recommend somehow bringing that information in, or just starting from this point forward leveraging QuickBooks assistant for that?
Bernard: Our philosophy is we don’t want to work backwards too much. I would just say that;
- Find some convenient juncture where you finish up your tax filing and do your tax preparation the old way.
- Then engage somebody who is really, really knowledgeable such as a QuickBooks Pro Advisor to really set this up exactly the way it’s supposed to be so that as you put transactions on a current basis, you begin to accumulate balances, and you just get going.
It’s really like you’ve been walking, and now you’re going to get into the car. While you’ve been walking, at some point you just get in the car and you run.
It may be a little bit of work to have the juncture done correctly, but this is the time when you have a professional with you anyway to set up the QuickBooks so that it will function properly. The challenge is really the initial setup. Once everything is set up, it’s really, really easy.
QuickBooks is a great program. It’s been thought through thoroughly, and I really love the way QuickBooks is handling sales taxes and payroll taxes.
We Are Happy To Help
Interviewer: It sounds like there’s a lot of different ways to use QuickBooks a lot more in the business. We have more resources on the website for different things that you can do with QuickBooks, and we’d be happy to answer any questions. Feel free to contact us through the MissionQuickBooks.com website.
Thank you so much for sharing these particular examples with us today, Bernard.
Bernard: Anytime. You’re welcome.