After saving selections for basic account and product mapping, you’ll gain access to the Tax Agency and Tax Mapping section. As mentioned in the setting up your QuickBooks file article, if you haven’t enabled sales tax in QuickBooks, this section won’t be available until you configure at least one Tax Agency.

For each physical location that has been configured in Crystal, a tax mapping must be selected. While some stores in the same geographic area may use the same tax rate, it’s possible that different stores need to report different local or state taxes.

In Crystal, each store may be assigned some default tax rate that is used on transactions from that point of sale location. The goal when translating transactions from Crystal to QuickBooks is to ensure the collected tax at each location matches the amount being collected on transactions created in QuickBooks, and to report and pay the collected tax to the correct tax agency via the related tax liability account.

As such, there are two possible options when mapping taxes from Crystal to QuickBooks: map to a tax agency, or map to a specified tax item (also called a tax rate in QuickBooks).

For a given jurisdiction, if the business only collects a single state tax rate in a location, such as in Connecticut, only the tax agency is required. If you’ve configured the state tax agency in QuickBooks, but haven’t created any tax rate or tax item for the agency, you can select Tax Agency and select the appropriate agency in Crystal. Crystal will use this agency and the associated tax liability account to record any tax from transactions.

Alternatively, if the business collects a combined tax rate for a location, such as a state, county, and/or city tax you’ll have to create the combined tax rate item in QuickBooks. When using a manually created tax rate/item from QuickBooks, select the option for Tax Item, and select the correct item from the dropdown list.

For example, if the business is in San Francisco, and collects 6% California State Tax, 0.25% county tax, and 2.38% city/district tax, a combined tax rate should be created in QuickBooks that includes those rates and all three agencies. The combined tax rate should then be selected using the Tax Item option for the San Francisco location in Crystal. When a transaction is created from the San Francisco location within Crystal with an 8.63% sales tax on a $100 purchase, $8.63 of tax is collected on the transaction. Crystal will create this transaction in QuickBooks, and will pass $8.63 in the transaction to the selected combined tax rate. QuickBooks will automatically separate out $6.00 for the liability to California State, $0.25 of liability for San Francisco County, and $2.38 for San Francisco City/District based on the proration of the combined tax rate.

Beyond the physical locations where the business has a Crystal point of sale, there may be other jurisdictions where nexus is established and sales tax must be remitted. The most common case would be ecommerce sales that pass a threshold for a given state. Any location where tax is collected that is not related to a physical point of sale location is managed in the additional jurisdiction section.

The only required additional jurisdiction mapping is for unmapped collected tax. This tax mapping is a catch-all that will contain any tax on transactions not from a physical location (i.e. ecommerce channels) and not mapped to a specified additional jurisdiction. For example, if an ecommerce sale is made to a foreign state and tax is erroneously collected, when Crystal syncs the transaction to QuickBooks the unknown tax will be placed in the mapping of this liability account/agency. The issue of why tax was collected can then be identified and corrected, and the liability written off.

Besides unmapped collected tax, known nexus locations can also be manually added to the additional jurisdictions. Known nexus locations can be added by selecting Add Location and selecting the nexus location from the dropdown. When transactions occur that do not originate from a physical point of sale location, Crystal will use the customer address information on the sale to identify the location of the sale. If the location corresponds to a nexus location that has been manually added as an additional jurisdiction, tax collected on the transaction will be deposited to the related mapped agency or item, and subsequently, the liability account.

One example of this would be in a state where the business traditionally receives a high volume of ecommerce transactions that pushes past the threshold where tax is required to be collected and remitted. In such a case, an additional jurisdiction can be configured so that tax is collected to the respective agency without additional effort.

Once these tax mappings are selected, click Save in the top or bottom navigation to lock in the selected configuration. At this point, the Tax Agency and Tax Mappings section will receive a green checkmark.

With QuickBooks connected, accounts mapped, and taxes set, we’re ready to try our first transaction sync.