How to set up an invoice for a sales tax audit

By December 3, 2021Uncategorized

How to set up an invoice for a sales tax audit

When issuing invoices to clients, it is imperative to break out the charges. For example, if you have shipping, installation, or even training charges, then, you must state it as such. Otherwise, the entire invoice will become taxable!

Example 1: A poorly-written invoice

.
Quantity Item Price Total
1 Accounting Software & Misc. $300 $300
SALES TAX (8%)

TOTAL

$24

$324

Example 2: A well-written invoice

.
Quantity Item Price Total
1 Accounting Software License $100
1 Training $100
1 Installation $100 $300
SALES TAX (8%) $8
TOTAL $308

Summary:

As you can see, the second invoice works out better for a sales tax audit. Use this format when you are invoicing your clients, otherwise, the entire sale is taxable such as in the case of Example 1.

How to set up an invoice for a sales tax audit

Ansari Law Firm

Author Ansari Law Firm

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