QuickBooks Online Automated Sales Tax for ConnectWise Manage (US Region)

Intuit have upgraded their Sales Tax calculations to a new auto Automated Sales Tax (AST), which will calculate the sales tax on an invoice.

Tax will be automatically calculated based on the following factors:

  • The state where you have nexus and are registered to collect sales tax
  • The physical address of your business
  • The physical address on the sales receipt or invoice
  • The product mapping you have associated with the products or services you are selling
  • The exemption status of your customer        

Click here to read more about how QuickBooks Online calculates sales tax

What does this mean for you?

Not using AST?

Wise-Sync will batch invoices as normal. You don't need to do anything.

Using AST? Here's the low down.

When AST is enabled, QuickBooks online invoices are created with a Shipping address, located below the Billing address. AST uses the invoice shipping address, in combination with your company's address (as specified in the QuickBooks Company settings), to determine the applicable sales tax amounts, if any.

QBO will disregard sales tax rates set by ConnectWise (and synced by Wise-Sync) and apply sales tax based on the AST method, described above. This means, all control over sales tax now rests with Quickbooks Online.

Considerations:

  1. The AST calculation will refer to the QBO Contacts state as set by the Shipping Address in ConnectWise. 
  2. There is no longer an option to select the state for each invoice, as this will be defined by Quickbooks Online directly.
  3. Where calculation differences are present between ConnectWise and Quickbooks Online, this will result in an out of balance transaction, as the tax calculation is different between the two systems.
  4. In QuickBooks Online, you must configure Tax Agencies for each state in which you are responsible for collecting taxes.
  5. The Shipping Address in ConnectWise needs to be complete or valid for AST to calculate sales tax accurately.
  6. AST cannot be fully supported by Wise-Sync due to an issue with zero tax invoices. Click here for more information, including what you need to do.

Configuration

If QBO AST is in use, select Override Sales Tax Option:

When the Override Sales Tax Level in Wise-Sync Company Settings > Tax Codes is set to Warning, Wise-Sync will override the sales tax amount and allocate the tax rate defined on the Tax Group or Tax Level in ConnectWise to the Quickbooks Online invoice (Tax Override). 

When the Override Sales Tax Level in Wise-Sync Company Settings > Tax Codes is set to Halt, any invoice that is not in balance will not be successfully batched to QBO. The resulting tax calculations must be corrected in ConnectWise, ensuring that a valid tax amount results. The out of balance transaction in Quickbooks Online will remain until the records is successfully resynced and matches between both systems.

QBO AST Shipping Address Handling

Sync Shipping From

Wise-Sync will take the address of the location/territory of the invoice and set this as the Shipping From address. If the ConnectWise Manage location/territory does not have an address configured, the Quickbooks Online invoice Shipping From address will be populated with the primary address configured in your Quickbooks Online Company.

Sync Shipping To

If the invoice in ConnectWise Manage contains an address to ship to, that address sync over as the Shipping To address in QBO. Otherwise, Shipping To in QBO will be blank.

How to Resolve QuickBooks Online AST out of balance errors.

Tax calculation discrepancies present between ConnectWise and Quickbooks Online during sync could occur due to a number of reasons:

An Address is incomplete or invalid in QuickBooks Online

If you have AST enabled when an invoice is synced Quickbooks Online needs to be able to validate the shipping address to calculate AST correctly. If a shipping address entered on the invoice is invalid. Quickbooks Online AST will not be able to calculate the tax rate resulting in a Sales Tax is out of balance error. To get the accurate sales tax calculation, please update the address you are shipping to in ConnectWise Manage.

Tax Agency is not set up in Quickbooks online

In QuickBooks Online, you must configure Tax Agencies for each state in which you are responsible for collecting taxes. If you have AST enabled, when an invoice is synced where the Agency has not yet been set up in Quickbooks Online, Quickbooks Online AST will not be able to calculate the tax rate resulting in a Sales Tax is out of balance error.

How to add a new tax agency

You can add another tax agency even after you already set up automated sales tax. Do this if you need to charge sales tax for your out-of-state transactions.

  1. Log into Quickbooks Online
  2. Go to Taxes, then Sales Tax.
  3. Select Sales tax settings.
  4. Select Add agency.
  5. Select the Agency ▼ dropdown, then look for the tax agency you want to add.
  6. Select the Filing frequency ▼ dropdown, then choose how often you file.
  7. Add the Start date, then select Save.
S
Suzette is the author of this solution article.

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