So I needed a few things. I need my invoice to match what Airbnb sends me for payout and I need the sales tax to be what is actually taxed so that QB can keep up with it for me. I worked on this with my accountant so I feel it's correct but I'm wondering about how the sales tax will work out.
Airbnb pays my state taxes but I am responsible for the city of Galveston taxes.
I use class tracking to keep up with each rental property. I have 4 long term rentals and this one brand new to the game short term rental. That meant I had to change my preferences to charge sales tax. So when I did that QB wants a tax entity for the ltr's that I don't charge so I made one up at 0% tax called Non-tax agency. Item List Type: Sales Tax Item, Account: Sales Tax Payable.
So to the invoice, the first line is for the actual money ABNB collected for the nights rent. I made a service item call Rent for Casa #177 (our class name for the str), left the description blank setting it up as I will fill that in with the info for each invoice (see image below). I made an income account called Rental Income from Airbnb for when I do my payments/deposits. I made the cleaning fee Item to go to a separate income account called Cleaning Fee Income. The 3rd item on the list is the Remove Tax item. This is to remove the tax so that the invoice will match what Airbnb is sending. This is an income non taxable account called Remove Tax, Type: Other charge, Account: To Remove Tax on Invoice. Enter it as a negative number.
And last I need to enter the fee Airbnb takes out. Name it Airbnb Fee,make Income account called Airbnb, Type: Other charge, non taxable. Also enter it as a negative number.
Pictures below to help illustrate it. This is what the invoice for 1 guest's stay works out to be.
Here is the P& L showing how this worked out. I am concerned that the tax expense will happen twice. Once here and again when I actually pay my sales tax.
But when I do my Sales tax liability report, it looks correct:
Here is the breakdown of the non-taxable sales of $56.40. It's the 2 line items I set up:
So this is where I am, I don't feel it's 100% correct but I'm at a loss as to how to fix it. I had read some other threads on here but wasn't sure about those so I decided to try this out and see what you guys think.
Updated about 2 years ago
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It appears no one is interested in this. I did change a few things since I first posted this. So as not to be paying sales tax on sales tax already collected, I backed the sales tax out of the first 2 line items, the Rent income for Casa and the cleaning fee. I also deleted the negative charge for sales tax but left the Airbnb fee the same. This method keeps you from including the sales tax in your income in the first place so no need to expense it later after paying it and also gets the amount of the invoice to match what Airbnb payout is.
Sales tax in Galveston is 9% so to back it out add a 1.0 to it and divide.
Example. Rent is 400 which on Airbnb now includes city sales tax I have to pay. 400 divided by 1.09 = 366.97 (amount before tax). Put that amount on your rent income line in the invoice and make it taxable. Cleaning fee done the same way and the amount comes out to be what AB sends you.
The fact that Airbnb doesn't include a line item so that you can collect this tax in the first place is a whole nuther thread.
I hope this helps someone as I cannot find any other answers on this. If this is incorrect I'd appreciate some feedback as well.
All taxable items should be the gross amount instead of deducting the tax. The way you are doing it here is overstating your rental income and cleaning fees. I can help you with this. I am at a NREIA conference this week.
The goal is to create a system that works for you with all booking sites. Do you use only Airbnb?
So I finally found the correct answer on the internet somewhere. I've checked and this works out for everything.
You will need these accounts and name them as such or you might get confused:
Airbnb - bank: bank account
Airbnb - fees: expense account
Airbnb - vendor: set up under vendor
Airbnb - customer: set up under customer
Sales tax item and percentage your city charges
City where you pay sales tax set up as a vendor
Figure out the taxes by backing them back out and do a sales receipt for the rental and the cleaning.
Make Deposits - Deposit above sales receipt into Airbnb Bank (I put the guest name in the memo)
Write check out of Airbnb Bank to Airbnb vendor for the Airbnb Fees (account Airbnb fees)
Transfer the remaining funds (under Banking>Transfer funds) from Airbnb bank to the checking account that Airbnb puts your money into.
ps. I also make a cleaning fee income item.