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Which GST code to use in QuickBooks Online
I am sure I have given conflicting advice about which GST code to use when recording your transactions over the years, as I find this to be quite confusing! In order to clarify (for myself as much as anything!) I have made a video explaining when each code applies.
Hopefully now you will know which codes to use on your invoices, and when recording your expenses! If you have any questions about recording transactions in QuickBooks let me know!
For advice regarding whether or not you should register, or collect GST speak to your accountant, who knows the details of your business.
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Which GST code to use in QuickBooks Online
This QuickBooks tutorial will walk you through the meaning of each GST code and gives examples of the transactions to which they apply.
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Let's go!Video Transcript:
Hi, Kerry here from MyQuickBookKeeping. It’s often difficult to know which GST or HST code you should be using when you’re preparing invoices for your customers or when you’re entering the transactions for your expenses into QuickBooks. I think over the years, I’ve given some conflicting advice to different people. So I thought today, I’d make a video and would just clear it all up at once and for all.
If you’ve registered for GST or HST, then normally you’re just going to be charging the basic GST or HST rate on all of your invoices. Here are examples of items that are taxable. The typical item that you’d buy at the shop such as clothing and footwear. Also legal and accounting services and lots of junk food. Some items are considered zero-rated. This is different from exempt.
For example, when I provide my services to a client in Canada, they’re taxable but when I work for people in the U. S., they’re zero-rated or taxable at zero percent. Other examples are the grocery items that most of us would be familiar with.
An important distinction here is that if your services are zero-rated, you can still claim input tax credits on the expenses that you incur in order to earn the income. So typically, most of the expenses in running your business. The GST on them can then be claimed back. So that’s if you’re charging GST or things are zero-rated.
Exempt supplies do not have GST or HST charge on them regardless of who is the customer. Examples include childcare, medical services and residential accommodation. This means that if you run a daycare for example, you’ll not be claiming any GST credits. In fact, I’d recommend not turning on the sales tax in QuickBooks at all.
The last code that you’d be familiar with is the “Out of Scope” code. This is when you’re entering a transaction that has nothing at all to do with the sales tax system, maybe you’re transferring funds between your business and yourself or you’re paying your credit card bill. Typically anytime you’re moving things between balance sheet accounts and they don’t hit the income statement, is where you’re going to be using that out of scope code.
In order to determine if the particular goods and services that you are offering in your business is subject to GST or HST, it’s important you get advice from your accountant who is familiar with your business and exactly what it is that you’re doing. Once you’ve work that out, then you can apply what we’ve just covered in recording the transactions in QuickBooks.
If you have everything recorded correctly in QuickBooks, you’ll know that you’ve collected the right amount of GST and I’m sure most of you are most concerned about collecting back all of those input tax credits that you’ve paid.
If you have any questions about QuickBooks, not GST, do reach out. You can book a consultation below. You can send me an email. My website address is down there. While you’re down there, click like, subscribe to my channel. There’s a month-end checklist that you can download. I should check that it includes the GST return, as that’s something that needs to be done regularly! Usually monthly, quarterly or annually. Once again your accountant will be able to help you with that. If there’s anything else you’d like to know, please do make a note in the comments box. My next video could be for you. Cheers!
Video Transcript:
Hi, Kerry here from MyQuickBookKeeping. It’s often difficult to know which GST or HST code you should be using when you’re preparing invoices for your customers or when you’re entering the transactions for your expenses into QuickBooks. I think over the years, I’ve given some conflicting advice to different people. So I thought today, I’d make a video and would just clear it all up at once and for all.
If you’ve registered for GST or HST, then normally you’re just going to be charging the basic GST or HST rate on all of your invoices. Here are examples of items that are taxable. The typical item that you’d buy at the shop such as clothing and footwear. Also legal and accounting services and lots of junk food. Some items are considered zero-rated. This is different from exempt.
For example, when I provide my services to a client in Canada, they’re taxable but when I work for people in the U. S., they’re zero-rated or taxable at zero percent. Other examples are the grocery items that most of us would be familiar with.
An important distinction here is that if your services are zero-rated, you can still claim input tax credits on the expenses that you incur in order to earn the income. So typically, most of the expenses in running your business. The GST on them can then be claimed back. So that’s if you’re charging GST or things are zero-rated.
Exempt supplies do not have GST or HST charge on them regardless of who is the customer. Examples include childcare, medical services and residential accommodation. This means that if you run a daycare for example, you’ll not be claiming any GST credits. In fact, I’d recommend not turning on the sales tax in QuickBooks at all.
The last code that you’d be familiar with is the “Out of Scope” code. This is when you’re entering a transaction that has nothing at all to do with the sales tax system, maybe you’re transferring funds between your business and yourself or you’re paying your credit card bill. Typically anytime you’re moving things between balance sheet accounts and they don’t hit the income statement, is where you’re going to be using that out of scope code.
In order to determine if the particular goods and services that you are offering in your business is subject to GST or HST, it’s important you get advice from your accountant who is familiar with your business and exactly what it is that you’re doing. Once you’ve work that out, then you can apply what we’ve just covered in recording the transactions in QuickBooks.
If you have everything recorded correctly in QuickBooks, you’ll know that you’ve collected the right amount of GST and I’m sure most of you are most concerned about collecting back all of those input tax credits that you’ve paid.
If you have any questions about QuickBooks, not GST, do reach out. You can book a consultation below. You can send me an email. My website address is down there. While you’re down there, click like, subscribe to my channel. There’s a month-end checklist that you can download. I should check that it includes the GST return, as that’s something that needs to be done regularly! Usually monthly, quarterly or annually. Once again your accountant will be able to help you with that. If there’s anything else you’d like to know, please do make a note in the comments box. My next video could be for you. Cheers!
Still need help?
Check this out.
Which GST code to use in QuickBooks Online
This QuickBooks tutorial will walk you through the meaning of each GST code and gives examples of the transactions to which they apply.
Let's go!Still need help?
We have what you need. Check out our courses and free resources to get more help managing your finances.
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