There are three different tax settings in LeanLaw.

  1. Sales tax is turned off

  2. Sales tax is through QuickBooks' Automated Sales Tax (US only)

  3. Sales tax is through another QuickBooks tax code

Sales tax is turned off

LeanLaw handles taxes through QuickBooks. So, if sales tax is turned off in QuickBooks, LeanLaw will not add any sales tax to invoices. You can confirm this in your firm's QuickBooks settings page. Next to Tax, it will read Sales Tax Not Enabled.

To enable sales tax

Note: Before enabling sales tax, check your area's tax laws--some areas don't charge sales tax for professional services.

Enabling sales tax is done in your QuickBooks. Just click the Taxes button on QuickBooks' sidebar.

Opening the Taxes page for the first time in QuickBooks will automatically begin a walkthrough for setting sales tax. If you get stuck setting up taxes in QuickBooks, or require more information, try QuickBooks' sales tax help page.

Once you have sales tax enabled, return to the QuickBooks page of your LeanLaw settings. The way LeanLaw handles tax will differ depending on which taxes you use.

QuickBooks with Automated Sales Tax (US only)

If your QuickBooks account has Automated Sales Tax (AST) enabled, you will see this in LeanLaw > Settings > QuickBooks:

When AST is enabled, taxes are calculated automatically based on region. One thing to note is that you won't see the tax until your invoices are sent to QuickBooks; this means any draft invoices or entries in LeanLaw won't show taxes until they're made into an invoice and that invoice reaches the QuickBooks tab of Billing.

Tax is applied based on a combination of "Product/Service" and settings for the Client in QuickBooks. To make services taxable, go to the Product/Service in QuickBooks and enable "Is Taxable". Also make sure the client is set up to be "Taxable". The right tax code is then automatically assigned to the invoice.

QuickBooks with other sales tax 

If you have sales tax enabled in QuickBooks, but you do not have Automated Sales Tax (which only applies to some US accounts), then you will see a "Default Tax Code" option in LeanLaw > Settings > QuickBooks:

You have to pick a default tax code in order for sales tax to be applied to invoices. If you don't pick a default tax code, LeanLaw will not apply any tax.

Once a default tax code is applied, LeanLaw will use the following approach to assign sales tax to the invoice:

  • If the client is marked "Is Taxable", tax will be applied to the invoice

  • For each line item, if the "Product/Service" for that line item is marked "Is Taxable", tax will be applied to that line item (typically tax is applied to services, not to expenses)

  • The tax code applied will be the one supplied for the client, or for the product/service, or if non are specified it will be the default tax code

Only the default tax code is found in LeanLaw, the remaining settings ("Is taxable" etc) are found in QuickBooks and cannot be set from LeanLaw.

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