You set up and control sales tax on tenant invoices in QuickBooks, not in STRATAFOLIO. STRATAFOLIO pulls in whatever tax setup you have in QuickBooks and reflects it on the invoices you create. This means that if a tax amount is wrong on an invoice, you fix it in QuickBooks rather than in STRATAFOLIO.
There are two common ways organizations handle sales tax in QuickBooks. Some use the built-in QuickBooks Sales Tax module, which calculates tax automatically. Others prefer to skip that module and add tax as its own line item, using an Income Item the same way you would use Rent or CAM. Both methods work with STRATAFOLIO. This article walks you through each one, along with how to correct a tax amount once you’ve set it up.
Before You Begin
Confirm the following before you set up or correct taxes.
- You have administrator access to the QuickBooks account connected to STRATAFOLIO. Only a QuickBooks admin can change tax settings and Income Items.
- You know which method your organization uses. Ask your bookkeeper or accountant whether your organization uses the QuickBooks Sales Tax module or adds tax as a line item. If you are not sure, check your existing invoices in QuickBooks for a line labeled Tax or Sales Tax.
- You’ve already set up your Income Items. If you have not created Income Items yet, see the STRATAFOLIO Knowledge Base article on creating Income Items in QuickBooks Online before continuing.
Where to Find This Feature
QuickBooks stores sales tax settings, not STRATAFOLIO.
In QuickBooks Online, you manage the Sales Tax module from the Taxes area of the left navigation menu. You manage Income Items, including a tax line item, from the gear icon, under Products and Services.
Invoices created in STRATAFOLIO sync to QuickBooks and reflect whatever tax setup exists there.
How to Use This Feature
Method 1: Using the QuickBooks Sales Tax Module
This method lets QuickBooks calculate tax automatically on your invoices.
- Turn on the Sales Tax module in QuickBooks Online. Go to Taxes in the left navigation menu and follow the prompts to set it up for your state or states.
- Set a custom tax rate if the automatic rate isn’t accurate. In Sales Tax Settings, under Custom rates, add a new rate for the correct agency.
- Make the tax agency inactive if you’re using a custom rate. This stops QuickBooks from applying its automatic calculation on top of your custom rate.
- Assign the custom rate to each customer. Open the customer’s record, select Edit, go to the Additional info section, and choose your rate from the Sales tax rate dropdown. Without this step, the custom rate will not apply to that customer’s invoices.
- Make sure each Accounting Customer’s address uses the correct country value.
- Mark the correct Income Items as taxable.
- Create or sync the invoice. Once you set up tax, STRATAFOLIO will automatically calculate tax on invoices you create and sync to QuickBooks.
NOTE: The exact steps inside the QuickBooks Taxes area can vary depending on your QuickBooks Online version and your state’s tax requirements. If you need help setting up the Sales Tax module for the first time, reach out to the STRATAFOLIO Onboarding Team or your accountant for guidance specific to your state.
Method 2: Adding Tax as a Line Item
Some organizations choose not to use the QuickBooks Sales Tax module. Instead, they add tax as its own line item on the invoice, the same way they add Rent or CAM.
- Create a Tax Income Item. In QuickBooks Online, select the gear icon, then Products and Services, then New. Select Service, give it a clear name such as Sales Tax, and choose the Income Account it should post to.
- Add the Tax Income Item to invoices. When you create an invoice in STRATAFOLIO, include the Tax Income Item as its own line, just as you would include Rent or CAM. Enter the correct amount based on your state’s tax rate.
- Update the amount as needed. Because this method treats tax as a regular Income Item, you update it exactly the way you would update any other Income Item on an invoice. Edit the line amount before the invoice is finalized, or by correcting it in QuickBooks and resyncing.
How to Correct Taxes on an Invoice
Because tax is set up in QuickBooks, corrections are also made in QuickBooks. The steps depend on which method your organization uses.
If you use the Sales Tax Module
If the automatic tax rate QuickBooks calculates is not accurate for your location, do not try to override it on a single invoice. Instead, go to Taxes in QuickBooks, set a custom tax rate for the affected tax agency, and mark that tax agency as inactive. This is so that QuickBooks stops trying to calculate it automatically. From that point forward, the custom rate will apply.
If an Income Item was charged tax when it should not have been, or the other way around, open the Income Item in Products and Services and correct its taxable status. This change applies going forward. Invoices already created will need to be corrected individually in QuickBooks.
If you use a Tax Line Item
Correcting a tax line item works the same way as correcting any other Income Item amount. If the invoice has not been finalized yet, edit the line amount directly on the invoice in STRATAFOLIO. If the invoice has already synced to QuickBooks, correct the amount in QuickBooks, then resync the invoice so STRATAFOLIO reflects the update.
More Information on Taxes
- STRATAFOLIO does not calculate or store tax rates itself. It always reflects what is set up in QuickBooks. This means your tax setup, whether it is the Sales Tax module or a line item, needs to be correct in QuickBooks before you create invoices in STRATAFOLIO.
- Every Accounting Customer used with the Sales Tax module needs US as its country code, or QuickBooks will not calculate tax correctly for that customer, even if the module is turned on.
- Only one Income Item for Rent needs to exist even if you use classes, and the same is true for a Tax Income Item. You do not need a separate Tax Income Item for every property or entity.
Examples and Best Practices and Tips When Using Taxes
- Example: A property management company in Ohio uses the QuickBooks Sales Tax module. They mark their Rent and CAM Income Items as taxable, and QuickBooks calculates tax automatically on every invoice created in STRATAFOLIO.
- Example: A different company chooses not to use the Sales Tax module because their state’s tax rules are complex. Instead, they created a Sales Tax Income Item and add it manually to each invoice, entering the correct amount based on their accountant’s guidance.
- Best practice: Confirm with your accountant which method fits your state and organization before you set anything up. Switching methods after invoices have already been created can create mismatched records.
- Best practice: Review your taxable Income Items periodically, especially after adding a new Income Item, to make sure tax is being applied consistently.
TIP: If tax amounts look wrong across many invoices at once, check the Income Item’s taxable status first before assuming the rate itself is wrong. A mismarked Income Item is a common cause of incorrect tax totals.
Troubleshooting Taxes
- Tax is not appearing on invoices at all: Confirm the Sales Tax module is turned on in QuickBooks and that the relevant Income Items are marked taxable. If you are using the line item method, confirm the Tax Income Item was actually added to the invoice.
- The automatic tax rate looks wrong: Set a custom tax rate for that tax agency in QuickBooks and mark the tax agency inactive so QuickBooks stops applying its automatic calculation.
- Tax was charged on an item that should not be taxable: Open the Income Item in QuickBooks and confirm its taxable status. Correct any already created invoices individually.
- An Accounting Customer is not being taxed correctly: Confirm that the customer has US entered as the country code in QuickBooks.
- A correction made in QuickBooks is not showing in STRATAFOLIO: Resync the invoice or integration so STRATAFOLIO pulls in the updated information from QuickBooks.
