QBO Tax Setup and Compliance 3

Question 1

How does QBO's automated sales tax handle a client that sells to customers in multiple states?

Accepted Answer

It applies the correct rate based on each customer's ship-to state using its built-in tax table

Answer

QBO's automated sales tax uses the customer's ship-to address to look up and apply the correct rate from its integrated tax table.

Question 2

What is 'nexus' in the context of sales tax compliance for a QBO client in the US?

Accepted Answer

A sufficient connection to a state that creates an obligation to collect and remit sales tax there

Answer

Nexus is the legal connection to a state — through physical presence or economic activity — that triggers a sales tax collection obligation.

Question 3

In QBO, where do you record that a customer has provided a sales tax exemption certificate?

Accepted Answer

In the customer's profile under Tax info

Answer

You enter the customer's exemption in their Tax info field within their customer profile, which then suppresses sales tax on all their transactions.

Question 4

Which QBO report is best for reconciling sales tax collected against the amounts shown on a tax return?

Accepted Answer

Sales Tax Liability Report

Answer

The Sales Tax Liability Report breaks down tax collected by agency and period, making it the standard reconciliation tool for return preparation.

Question 5

When a ProAdvisor sets up sales tax in QBO for a new client, what is the recommended first configuration step?

Accepted Answer

Enter the correct business address and configure tax agencies based on where the client has nexus

Answer

Entering the correct business address and nexus-based tax agencies ensures QBO calculates accurate sales tax rates from the first transaction.

(QBO) Certified QuickBooks ProAdvisor Practice Test