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Set up AvaTax Connector for QuickBooks Desktop for your tax calculation needs

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We’ve outlined the steps for you to connect and manage AvaTax Connector for QuickBooks Desktop to get started.  

Before you begin 

  • You have purchased AvaTax for QuickBooks Desktop. 
    To purchase, log into AvaTax > Settings > Integrations > All integrations > search for QuickBooks Desktop > select Get Started > select Get integration.

  • You must be an administrator to connect your business app to AvaTax. 

  • Before you install AvaTax for QuickBooks Desktop, install any Windows operating system updates.  

  • Make sure everyone who uses QuickBooks Desktop is logged out, including you. 

Step 1: Install AvaTax for QuickBooks Desktop

Download and install the AvaTax for QuickBooks Desktop to establish the connection between AvaTax and your business application. 

Steps

  1. On the AvaTax for QuickBooks Desktop page, select Install.
  2. In Avalara, go to Settings > Integrations.
  3. On the Manage tab, on the tile for Connector for QuickBooks Desktop, select See Connector Versions and then select Download next to the latest version.
  4. Extract the contents of the .zip file you downloaded from Avalara. 
  5. Run the .exe file to begin the installation wizard.
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  6. Follow the prompts to install AvaTax for QuickBooks Desktop and then click Finish when the installation is done.
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Step 2: Connect QuickBooks Desktop and AvaTax

The next step is to connect QuickBooks Desktop and AvaTax to enable the flow of transactions to AvaTax.

Before you begin 

  • Installed the Avalara for QuickBooks Desktop app.
  • You have AvaTax username and password handy.
  • Created a company profile on Avalara AvaTax. Learn more

Steps

  1. Right-click the QuickBooks Desktop icon and select Run as Administrator. 
    When QuickBooks Desktop opens, make sure it's running in single-user mode.  
  2. Select the company you want to connect to the QuickBooks Desktop company profile and select Open. 
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    The QuickBooks Desktop - Application Certificate box is displayed. 
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    Under Do you want to allow this application to read and modify this company file?, select one of the following options:
    No If you do not want to provide AvaTax with read-and-modify access to the QuickBooks company file. 
    Yes, prompt each time  If you want to provide AvaTax with read-and-modify access to the QuickBooks company file. You also want that the application certificate prompts the message each time.
    Yes, whenever this QuickBooks company file is open (Recommended) If you want to provide AvaTax with read-and-modify access to the QuickBooks company file when the file is open. 
    Yes, always; allow access even if QuickBooks is not running If you want to provide AvaTax with read-and-modify access to the QuickBooks company file even when the file is not running. 
     

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    Note

    None of these options allows access to personal data.
  3. To allow access to personal data, on the QuickBooks - Application Certificate screen, select Allow this application to access personal data such as Social Security Numbers and customer credit card information.
  4. Select Continue, and then select Done.

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  5. The Access Confirmation dialog displays. Select Done.
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    The connector setup wizard is displayed.

  6. Follow the prompts in the AvaTax connector setup wizard to connect to AvaTax.

    1. Enter your AvaTax username, password and then select Next.
      (Optional: For an extra level of security, select Advanced Options. Enter your AvaTax account number and license key.)

    2. Choose the company profile you want to associate with your company in QuickBooks Desktop and select Next. 

    3. Assign your customer to AVATAX tax item for tax calculation. 

      • To assign the AvaTax tax items to all of your customers, select Next.

      • To use a tax item you previously assigned to your customers in QuickBooks Desktop, deselect the assignment you want to retain.
        When you assign the AvaTax tax item to customers, QuickBooks Desktop sends their transactions to AvaTax for tax calculation.

        Note: AvaTax creates a backup of your tax item assignments. You can always go back to your previous assignments using the Rollback tax schedule utility.

QuickBooks Desktop is now connected to AvaTax and is ready to send transactions for tax calculation.

Step 3: Manage taxability of products and services

After you connect your business application to AvaTax, you may want to further adjust the settings depending on the products and services you sell and whether you have exempt customers.

Map the items you sell to Avalara tax codes 

Some products—such as clothing, food, software, medical supplies, software subscriptions, and freight—are taxed differently depending on where they're sold. To get the most accurate rate for these items, map them to Avalara tax codes. If you don't map items to Avalara tax codes, all products and services are taxed at the standard rate for each jurisdiction.

Steps

  1. In QuickBooks Desktop, go to File > AvaTax > Preferences.
  2. Select Taxability > Tax Codes and complete the following:
    1. Select All from the Item Type list.
    2. Select the item you want to map from the Item Name list.
    3. Enter the Avalara tax code in the Tax Code field. 
  3. Select Add and then select OK.

Exempt customers from tax

If you regularly sell to tax-exempt customers, you need to consistently exempt their purchases.

Use CertCapture

CertCapture is the most comprehensive solution for managing exemption certificates and other compliance documents. This product must be purchased separately. Contact your Account Manager for more information.

Use CertCapture with or without AvaTax to manage compliance documents:

  • Store an unlimited number of your customers' exemption documents in one place
  • Automatically exempt purchases from tax when appropriate
  • Send mail or email campaigns to ask your customers for certificates, and then track their progress

Once you set up CertCapture, you can add and request exemption certificates from QuickBooks Desktop.

Use Exemptions

Exemptions is included with AvaTax. Exempt purchases from tax by associating exemption information with customer records.

To activate Exemptions in AvaTax, select Exemptions and then select Get Set Up. For more information, see set up Exemptions.

Add an exemption number to a customer record

When you add an exemption number to the Resale No. field on a customer record in QuickBooks Desktop, AvaTax recognizes the customer as exempt. However, it does not store customer exemption information.

To store customer exemption information, use CertCapture or Exemptions.

Add an entity use code to a customer record

When you add an entity use code to the Resale No. field on a customer record in QuickBooks Desktop, AvaTax exempts this customer's transactions as long as the entity use code is valid for the jurisdiction where the transactions take place. However, it does not store customer exemption information.

To store customer exemption information, use CertCapture or Exemptions.

Tip icon

Before you assign entity use codes to customers in QuickBooks Desktop, enable entity use codes for transactions.

In QuickBooks Desktop, go to File > AvaTax > Preferences > Customer Exemptions and make sure Use Entity Use Codes is selected.

Step 4: Update AvaTax settings for QuickBooks Desktop

AvaTax for QuickBooks Desktop works with the suggested default settings, but you can update them to meet your company's business needs. 

Steps

  1. In QuickBooks Desktop, go to File > AvaTax > Preferences and adjust the settings you want to change. 

Connection

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General
  • Username and Password: The username and password you use to log in to AvaTax.
  • Advanced options:
    • Account Number: In Avalara, click your name. Your account number displays on the dropdown menu as Account ID.
    • License Key: This is the license key that was generated by the person that set up AvaTax. Then, the license key is emailed (with the Account ID) to all Avalara admin-level users. If you don't have the license key, get a new one.
  • Sandbox or Production: Select the type of account you're connecting to AvaTax.
  • AvaTax Company: Select which company in AvaTax you want to connect to QuickBooks Desktop. If you have only one company Connector automatically selects that company.

Settings Import

(required only when you migrate from one company to another)
  • Company: Select the company that has the settings you want to import.
  • Import Settings: Select which settings you want to import.

Click Import Settings when you're ready.
Troubleshooting
  • Check AvaTax Setup: Click to repair Connector for QuickBooks Desktop.
  • Troubleshooting Options: When you enable logging, Connector records detailed information about each transaction. It also records success and error messages. This log can help troubleshoot if you have any problems in the future.


Tax Calculation

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General
  • Validate Addresses Before Tax Calculation: This setting is recommended only if you enter ship-to addresses as you work during the QuickBooks Desktop sales transaction entry process. Enabling this setting could increase your usage of Avalara services.
  • Resume Tax Calculation on Address Validation Failure: If you select Validate Addresses Before Tax Calculation, enable this to have AvaTax calculate tax using the address you entered, even if address validation fails.
  • Use Lat / Long Coordinates for Tax Calculation if Available: Enable to calculate tax based on latitude and longitude coordinates when they're available instead of addresses.
  • Open Sales Document after Tax Calculation: Enable to open the document and view the tax amount calculated for the transaction after AvaTax calculates tax.
  • Always Display Tax Details: Enable to show the tax details for a transaction.
  • Include Job Name with Customer Name: Enable to send the customer name and job name from QuickBooks Desktop to AvaTax as the customer code. If this option is disabled, only the customer name is sent as the customer code.
  • Turn off Error List Pop-up: Enable to turn off the error list that displays every time you open QuickBooks Desktop.
  • Map Fields to Item Name and Description: Click to map item names to descriptions.
    • Item Name: Select an item.
    • Item Description: Select a description.
    • Click Save to map the name to the description.

Tax on Purchases
  • Assess Consumer Use Tax On Vendor Bill: If enabled, your accounting software uses AvaTax to calculate consumer use tax on vendor consumer use tax transactions.
  • Consumer Use Tax Liability: Select the account to which you want to credit your vendor use liabilities.
  • Debit Account Option: Select the account from which the consumer use tax accrual amount is to be debited.
  • Consumer Use Tax Debit GL: Select the account to which the consumer use tax accrual amount is to be debited.
  • Vendor Paid Tax Line Item: Select the line item for which vendor use tax is to be configured. If you don't enter an amount for this line item when you create a return invoice, the vendor charged tax is 0.
  • Select Vendor for Use Tax Assessment: Click to select the vendors, registered in QuickBooks Desktop, for whom you want to calculate consumer use tax. In the Select Vendor for Use Tax Assessment window:
    • Select the vendor(s) for whom you want to calculate the consumer use tax, and then click Save.
      • If you want to select all the vendors from the list, click Select All.
      • If you want to deselect all selected vendors, click Clear All.

Disable
  • Disable automatic tax calculation: If tax calculation is disabled, transactions are placed in an error list to be calculated in the future.
  • Transactions to exclude: If selected, tax isn't calculated for the transaction types listed when using memorized transactions.


Address Validation

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Validate all addresses

Click to validate all address types.
Validate customer addresses only

Click to limit address validation to customer addresses.
Validate vendor addresses only

Click to limit address validation to vendor addresses.
Return Results in Uppercase

Select to save all address validation results in uppercase format.
Validate company address

Validate your company's address.


Taxability

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Shipping
  • Assign Freight Tax Codes to Shipping Terms: Associate shipping terms with freight tax codes. Items assigned to these shipping terms are assigned the associated freight tax code.
  • Assigned Freight Tax Codes: View which shipping terms have been mapped to freight tax codes and delete as necessary.
  • Create Custom Freight Tax Code: Provide a freight tax code and description, then click Save.

Tax Codes
  • Manage Special Taxability: Specify the item type and then select the item name. Enter the Avalara tax code you want to associate with that item.
    The items that have been associated with tax codes display below the mapping fields. Review and delete as necessary.
  • Export: Click to export the current item tax code mapping list.
  • Import: Click to import an existing item tax code mapping list.

UPCs

UPC field: Select the item code you want to map.

International Tax ID

BIN field: Select the business identification number you want to use.

Customer Exemptions

General

Use Entity / Use Codes: Enable to map entity/use codes for your customer addresses to flag them as exempt from sales tax.

Certificates

Add exempt customers and request CertCapture exemption certificates.
 

Step 5: Send a test transaction from your business application

After you connect your application to AvaTax, send a few test transactions to make sure the connection is working and to verify different business scenarios and workflows.

  1. In your business application, create and commit a transaction or an invoice.
    The transaction must be committed for AvaTax to calculate tax. If your application allows it, add a prefix to the document code on the test transaction so you can easily identify the transaction and void it later on. 

    Tip icon

    Tip

    We recommend testing common workflows and billing scenarios including quotes, return invoices, or credit memos.

    Here are some things you might want to include in a test transaction:

    • Addresses in jurisdictions where you collect and pay tax
    • Products and services mapped to Avalara tax codes
    • Shipping fees included in a freight line
    • Tax-exempt customers, if any
  2. Once the transaction is posted to AvaTax, sign in to AvaTax and go to Transactions to review the transaction. If the test transaction doesn't show up in AvaTax or look as you expect, try these things:
    • Make sure the account ID, license key, and company code in AvaTax match the ID, key, and code in your business application.
    • Create another test transaction and turn off any plugins or customizations to your business application. Sometimes these additions interfere with the connection to AvaTax.
  3. Change your settings as needed.
  4. Once you're satisfied with the AvaTax results, void the transaction in your business application and in AvaTax to make sure it isn't included in your tax returns.

Frequently asked questions