How do I calculate sales tax by zip code?

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Introduction

Many U.S. states calculate tax by roof top location. Zip code taxation is only accurate 70% of the time. QuickBooks, out of the box, cannot sales tax by zip code. We supply two workarounds for this scenario; add tax as a line item or use Avalara, a third party tax service.

Add Tax as a Line Item

This adds tax as a line item, as if the customer ordered a product. Our system creates a line item called Sales Tax of service type. Your Accoutant can do a journal entry crediting Sales Tax Payable and debiting the income account for this service item.

Avalara

If you are using Kentico or nopCommerce, our company has made a 3rd party plugin that will calculate tax by roof top location. This service will pay state tax agencies and track Sales Tax Payable instead of QuickBooks. Avalara also has a QuickBooks plugin for their tax service. For more info, visit their website.

Here is our direct contact at Avalara:

David West | Ecommerce Channel Sales Manager
Office: (206) 826-4900 x1119
Cell: (206) 979-6172
david.west@avalara.com

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