Creating a Simple Invoice for Taxable & Non-Taxable Items

07Jun 2012 by Nancy Smyth

 

Creating a simple invoice for taxable and non-taxable items, that the customer can easily understand – while allowing you to track your Sales Tax Liability often causes a quandary for QuickBooks users.  The following question, submitted by a reader, is a perfect example of just how difficult this situation can sometimes be.

Ask the Expert - Q & AHi,

We are curious if there is a way to do this:

We do cable Runs and would like to quote our customers $150.00/drop to include labor and materials.

How do I calculate sales tax on a portion of the $150.00? Is that possible.  We have been breaking it out.. but it is tedious and confusing to customers.  Any Ideas?

Thanks for your help.

Jennifer

Hi Jennifer

That certainly is a dilemma – you need to be able to accurately track your Sales Tax liability for taxable sales and provide a simple to read invoice to your customer all at the same time.  Have you thought about using/creating a QuickBooks Group Item?  Here’s how it would work:

  • Start by going to your Item List in QuickBooks, edit your Labor and Materials items – setting the appropriate Tax Code for each item, for example if Labor is taxable you would set the Tax Code to Tax and then make sure that the Materials item was set to Non.
  • Next, click the Item button, at the bottom of the List, choose New, change the Type to Group, give it a meaningful Name or Number, in the Description type in “Cable Runs” – or whatever you want to have displayed on the invoice, DO NOT check the Print Items in Group option, and select your Labor and Materials items (your window should like the one shown below).
create a group item for cable runs
Right click on the image to enlarge it

Now, go ahead and create an Invoice, using the new Cable Run Group Item, making sure that the invoice is set to calculate your Sales Tax amount, this is what you’ll see on your screen:

group item screen view
Right click on the image to enlarge it

When you print your invoice, this is what the customer will see:

customer view
Right click on the image to enlarge it

While this may not be the perfect situation, because the invoice may still be confusing to the customer, it is the one that will require the least amount of additional work for you when it’s time to pay your Sales Tax Liability.

I hope this helps.

Nancy

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6 thoughts on “Creating a Simple Invoice for Taxable & Non-Taxable Items”

  • Keith, I tend to agree with you – and the method that you describe is usually the one that I recommend myself. Unfortunately, there is not just one correct way – that would really make life easy now wouldn’t it?

  • Keith Gormezano

    Personally, I think it would be easier for most customers if you simple broke up each item (labor or materials), listed them separately or a a group item with individual items printed, and indicated which was taxable and which was not. You could even say it in the description.

    Then the customer can do the math themselves and check what the sales tax is for.

    That is what I would advise my Seattle clients that I set up, review, train, help, and support in using their QuickBooks software.

  • Hi Jennifer, if this still confuses your customers there are a couple of other methods that will make them happy, but unfortunately cause you more work 🙂 Sometimes it’s just so hard to please everyone!

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