How do I calculate sales tax by zip code?



Many U.S. states calculate tax by roof top location. Zip code taxation is only accurate approximately 70% of the time. QuickBooks Online, out-of-the-box, cannot calculate 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 sales tax as a line item to your orders 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.


If you are using Kentico or nopCommerce, JMA Web Technologies offers 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:

Art Duke 
Phone:  (919)-454-2611 
art dot duke AT 

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