For e-commerce businesses, sales tax management can become challenging as there are many sales channels and payment platforms included in the purchase process. With Synder, you will no longer be bothered by questions such as how to record sales tax in QuickBooks, because the software will automatically match the tax info from each transaction with your QuickBooks sales tax setup and reflect the amounts you owe to each tax agency so that you can prepare your business for the tax season effortlessly in time with no rush.
Synder calculates tax rates based on the sales total amount and the tax amount. Synder receives the transaction information from your sales platform (for example, Stripe, PayPal, Shopify, Amazon, etc.), then calculates the tax rate and matches it to the QuickBooks Sales tax codes (the list of all tax agencies and rates can be found in the Taxes tab in your QuickBooks Online company). However, there are cases when your payment provider doesn’t have any tax details, and you know that they should be applied based on the location of the sale or the product/service that you sell. In such cases, you can fill data gaps in QuickBooks Online using the Smart Rules feature in Synder.
Note: In our example, we set “Invoice” as a trigger, however, if you want the rule to work out for Sales Receipts as well, an additional similar rule should be created and enabled in your list of Smart Rules.
How to apply Taxes based on the product name
1. Go to the Smart rules tab on the left menu → Rules → green Create rule button.
2. As a trigger that starts the flow we select the Invoice→ Created → Condition* button. Once you sync a transaction via Synder, you will have both Expense and Sales Receipt/Invoice created in QuickBooks, and only the created Invoice will trigger a rule to work.
*Condition means that you are going to specify additional conditions for the rule to be applied to specific Invoices.
3. Now we start to build our if-then algorithm. From the “Select field” dropdown select Line: Product or service → Name → Contains → coffee or Coffee → click Yes. That means if the name of the product/service of a transaction equals “coffee” OR “Coffee”, then the action described at the next step will be applied to the Invoice.
4. You can extend the rule by adding other conditions (hit No in the “IF” box to create a new condition) but for our current flow we select the Actions button → Select QuickBooks action to be applied to Invoice → Update current* or Update line** → Set QuickBooks entity data.
*Update current – an option to update the currently synchronized Invoice which triggered the flow.
**Update line – an option to update the item line of the currently synchronized Invoice that contains the corresponding Product/Service name (“coffee” or “Coffee”). We recommend using this option if you have Invoices with multiple product/service lines and would like to assign different taxes to each item line.
5. Choose the Tax Calculation Type (for example Exclusive of Tax)* → Enter the tax (for example “HST ON”) you want to be applied to the transaction if it matches the previously set condition → hit Submit and click on the Save rule button.
6. To check the results in QuickBooks Online and make sure the Tax is applied automatically, synchronize a test transaction in the Transactions tab of the left-hand side menu in Synder, hit Show details and then Show in QB. Here you go:
Alternatively, you can go to the Rules tab once a transaction that is compliant with the selected criteria is synced → Executions tab and check if the rule was triggered and applied. Use the “Show object” link to open the log of the transaction updated by the flow.
Note 1: There is no need to create a new rule for each product/service name, you can specify multiple conditions within one rule instead. Below you will see an example of how the rule may look if you need to apply different QuickBooks sales tax codes based on different item names (all conditions in one rule).
Note 2: If you have QuickBooks Online US version then go back to Step 5 and select TAX from the dropdown instead. QuickBooks will assign the tax rate automatically depending on the shipping address of the transaction and your settings.
Voilà! From now on you no longer need to adjust transactions manually in QuickBooks as Synder will take care of your tax reports and automatically record tax details in your books. Moreover, Smart rules can be used to assign classes, apply locations, categorize sales and expenses, send thank-you emails and reminders automatically and simply add missing data to your books, so that you can just sit back, relax and let Synder do all the accounting for you, freeing up time to grow your business.
Get in touch with the Synder team via online chat, phone, or email with any questions you might have so far – we are always happy to help you!