In this blog post, we will walk you through the step-by-step process of GST/HST Return Report in QuickBooks Desktop is a great accounting software that aids you in managing major financial tasks in your business. Along with all its powerful and efficient features, QuickBooks Desktop also takes care of your sales tax. It enables you to be in complete control by maintaining an accurate registry or record of the taxes for the goods and services you offer to sell.
Sales tax in QuickBooks allows you to collect taxes and maintain accurate records or add sales taxes so that you can track and send your tax collection easily. It makes it easier to fill out your tax forms when paying for your sales tax liability. This allows one to have accurate invoices.
What is GST/HST in QuickBooks Desktop?
You are required to collect tax from your customers when you offer products and services. The sales tax feature is used to identify the prices that are paid to your customers—the sales tax report aids in generating, calculating, and tracking sales tax. Knowing how to properly file your taxes with the Canada Revenue Agency (CRA) and on QuickBooks Desktop will help you in preventing any interest charges or penalties. The sales tax comes in two options namely;
- Goods and service tax (GST) – This is a 5% tax that is applied to most taxable products and services.
- Harmonized sales tax (HST) – This is when the Goods and service tax (GST) is collected together with the Provincial sales taxes (PST).
You should know that not all businesses are required to collect, charge, and remit the sales tax, and not all products and services are bound to the GST/HST. This is because it depends on the amount of sales you make and the type of supply you are selling.
Types of Supply include;
You can figure out the GST/HST rate of your business when you know which supply is taxable in your business and at what rate. The CRA has categorized products and services into three specific groups. They are as follows;
- Taxable – The GST/HST is charged, collected, and remitted. You can also claim credits as a registrant, known as Input tax credits (ITCSs), that are paid to produce the goods and services.
- Zero-rated – The GST/HST is not charged, collected, or remitted. You can, however, claim ITCs for GST/HST that are paid to produce the goods and services.
- Exempt – The GST/HST is not collected, and you cannot claim ITCs for any HST/GST that is paid.
You can get examples of each group of the types of supply on the CRA’s web page.
How to Record GST/HST in QuickBooks Desktop
You can file your HST/GST and QuickBooks desktop in two main steps. They are;
Filing your GST/HST Return with the Government or CRA.
- First, apply for an HST/GST number. Once you register, you will become an HST/GST registrant, and you will also receive your 9-digit business number.
- Then, collect the HST/GST. You can do this by finding out your HST/GST charging rate. This will help you know what to include on your invoices and receipts.
- Next, organize your bookkeeping records. This enables you to calculate the amount of HST/GST that you have collected, the amount paid for GST/HST for your business expenses, and the tax amount that you can deduct from your net tax.
- Now file your GST/HST return. After collecting taxes from your customers, you can now report the GST/HST you have collected to the CRA.
Before you can record HST/GST in QuickBooks desktop, you need to generate the reports that are required to file with the CRA. The two main reports that you need to generate are;
- The Balance sheet
- The GST/HST summary report
You can generate your report by first navigating to the report section and downloading the two main reports. Then, change the dates to the filing period date. You can now add these dates to both reports.
Then, make sure your GHS/HST matches your reports. You should not file your GST/HST with CRA unless the number on your Balance sheet and the HST/GST summary reports match.
Recording GST/HST return in QuickBooks desktop.
After filing your GST/HST, you can now record your payment and payment filing on QuickBooks desktop. You can easily record your GST/HST on QuickBooks desktop using the procedure below;
- Start your QuickBooks desktop application and click on ‘Taxes’ on the side panel.
- Choose the period that is ready to file from the period you just filed for in QuickBooks desktop.
- Now Click on ‘Prepare return’ and a window will appear on your screen. This window looks like the one you fill out your CRA account in.
- Next, check and edit the end date of the return and the date that you filed the GST/HST return with the CRA.
- Confirm that the details you entered here match what you filed with the CRA account.
- Now click ‘mark as filled’ and then tap on ‘continue.’
- A new window will appear and will prompt you to confirm if you want to record the payment now or later. You can record ‘now’ if you made the payments immediately after you filed. However, if you plan on making the payments at a later time, you can record the payment ‘later.’
How to Record HST/GST Payments in QuickBooks Desktop
You can record your GST payment on QuickBooks desktop using the following steps;
- Navigate to ‘Taxes’
- Click on the ‘Returns’ tab under Filed returns
- Then select ‘Record payment’ and add your payment details, such as your bank account, the payment amount, and the payment date.
- Now, Memo it and click on ‘Save.’
Conclusion
QuickBooks allows you to charge, collect, and remit your taxes effortlessly. By following the proper procedure in your location, you can find tax filing time to be a smooth one. This will help you avoid interest charges and penalties by filing your sales taxes on time. It ensures accuracy and accountability in your business’s financial transactions.
