How to Accrue Use Tax on Purchases

The supplier charged nothing, so nobody paid

An out-of-state supplier with no nexus in your state sends an invoice with no sales tax. The tax is still owed, as use tax, where the goods are received.

Use tax is worked out at year end from a list of bills, if at all. Each bill has to be checked line by line against the rate for the receiving location.

When the accrual is finally made, it is one lump journal with nothing tying it back to the bills it came from.

Why this happens

Suppliers that charge no sales tax are not marked, so their bills look the same as fully taxed ones.
The receiving location is ignored, so the wrong state or city rate is used.
A partly taxed bill is treated as either fully taxed or untaxed.
Use tax is posted but never reaches the state return.

Biznsbook addresses this through Use tax accrual, the Charges no sales tax flag, the state return use tax line when Accounting and Taxation are on. Sales, purchases, POS, Field Service, and Real Estate all ask the same tax engine, so the invoice, the return line, and the ledger read the same posted tax.

A second state, a reseller with a certificate, and a supplier that charged nothing are where a rate table drifts. Making Biznsbook the place that taxes the invoice, keeps the certificate, and builds the return keeps those on the same posted tax.

Step-by-step: Accrue Use Tax on Purchases

Written for owners, bookkeepers, and finance staff who charge and file sales tax, GST, HST, QST, or PST with Biznsbook Taxation. Biznsbook calculates and reports from your own setup. It does not give tax advice and does not file returns with a tax authority for you.

Mark the supplier. On the party form, tick Charges no sales tax for suppliers that charge none. With jurisdiction rules, bills from that supplier then carry no input tax, with a warning on the line.
Post the purchase bill. Only posted bills can accrue use tax. Purchases are taxed where the goods are received: the GRN’s warehouse, otherwise the company location.
Open Use tax on the bill. In rules mode, a posted purchase bill has a Use tax button. The page shows, per line, the tax due at the receiving warehouse with state, local and category rules, what the supplier charged, and the use tax.
Check partly taxed lines. If the supplier charged some tax but less than is due, the line accrues the gap, split pro rata across the components that apply.
Accrue use tax. Click Accrue use tax. Biznsbook posts a debit to use tax expense, the non-recoverable tax account, and a credit to each tax’s payable account. It posts once per bill, with the tax rows and the journal in one transaction.
Respect where you are registered. With Charge only where registered on, use tax is due only where you hold a registration. A bill received in a state where you are not registered accrues nothing for that state.
File it on the return. The accrual is read by the state return. Purchases subject to use tax and the use tax accrued appear on their own lines, kept out of the sales lines. Use tax you owe but did not accrue can be typed on the return as an entered line.

Review results after the first full filing period cycle. Adjust roles, mappings, or approvals where the same exception repeats.

Screen names in this guide match the Taxation tab bar in the product: Overview, Returns, Search, Settings, Packs, Rules, Local rates, Simulator, Registrations, Authorities, Components, Groups, Certificates, Nexus, 1099 / T4A, Provider, Checklist, Audit log, Approvals, and Guide. The tab bar only shows the tabs your permissions allow.

Common mistakes to avoid

Mistake 1: Suppliers that charge no sales tax are not marked, so their bills look the same as fully taxed ones. Repeating this each month usually shows up first in a return line that does not match the ledger, or tax charged in the wrong place.
Mistake 2: The receiving location is ignored, so the wrong state or city rate is used. Repeating this each month usually shows up first in a return line that does not match the ledger, or tax charged in the wrong place.
Mistake 3: A partly taxed bill is treated as either fully taxed or untaxed. Repeating this each month usually shows up first in a return line that does not match the ledger, or tax charged in the wrong place.
Mistake 4: Use tax is posted but never reaches the state return. Repeating this each month usually shows up first in a return line that does not match the ledger, or tax charged in the wrong place.

Note each recurring gap when you review the filing period. Each one should map to a step in this guide or an item on the compliance checklist.

Best practices that hold up as you scale

Mark the supplier — On the party form, tick Charges no sales tax for suppliers that charge none.
Post the purchase bill — Only posted bills can accrue use tax.
Open Use tax on the bill — In rules mode, a posted purchase bill has a Use tax button.
Check partly taxed lines — If the supplier charged some tax but less than is due, the line accrues the gap, split pro rata across the components that apply.
Accrue use tax — Click Accrue use tax.

Teams that keep addresses complete, try a change in the Tax Simulator before switching it on, and file from the return lines rather than a side spreadsheet keep the invoice, the return, and the ledger in step.

How Biznsbook supports this workflow

Use tax accrual — part of Biznsbook Taxation, which sits on Accounting. Tax can come from tax groups, from jurisdiction rules installed by the Canada or US pack, or from your own Avalara AvaTax or TaxJar account. Whichever method you pick, posted tax lands on invoice tax lines that the dashboard, the return lines, and the settlement journal all read. Posted documents keep their tax when you change the setup later.

the Charges no sales tax flag — part of Biznsbook Taxation, which sits on Accounting. Tax can come from tax groups, from jurisdiction rules installed by the Canada or US pack, or from your own Avalara AvaTax or TaxJar account. Whichever method you pick, posted tax lands on invoice tax lines that the dashboard, the return lines, and the settlement journal all read. Posted documents keep their tax when you change the setup later.

the state return use tax line — part of Biznsbook Taxation, which sits on Accounting. Tax can come from tax groups, from jurisdiction rules installed by the Canada or US pack, or from your own Avalara AvaTax or TaxJar account. Whichever method you pick, posted tax lands on invoice tax lines that the dashboard, the return lines, and the settlement journal all read. Posted documents keep their tax when you change the setup later.

The Canada and US tax packs are drafts until a tax adviser reviews them, and rates and taxability must be checked for your business. Rates are effective-dated, and reinstalling a pack keeps rules you edited. Biznsbook prepares returns and contractor figures and exports them; it does not e-file, and it is not tax advice.

Suggested implementation timeline

Week 1: Complete the state or province and postal code on the company, warehouses, and customers, and install the country pack for the places you sell into.
Week 2: Record your registrations, set item tax categories, and try real sales and purchases in the Tax Simulator.
Week 3: Switch Tax Settings to jurisdiction rules, post a few real invoices and purchase bills, and check the tax on each.
Week 4: Create the first filing period, put use tax accrual to work on real postings, review the return lines against posted tax, and export them for your adviser.
Ongoing: Each filing period, review the compliance checklist and the points under “Use tax and the settlement journal” below.

Product page: Taxation. Hub: sales tax and GST guides. Decision: built-in sales tax rules vs Avalara or TaxJar.

Why the receiving warehouse matters

Use tax is owed where the goods are used or received, not where your head office is. Biznsbook works it out at our location for the bill: the receiving warehouse’s state and ZIP, with any local rates you imported for that ZIP and the item’s tax category.

Set the state and postal code on each warehouse. A warehouse without a location uses the company’s, which is only right if they are in the same place.

Suppliers that charge no sales tax

The Charges no sales tax flag is for suppliers, typically out-of-state ones with no nexus in your state. With jurisdiction rules, every standard line on their bills is planned as out of scope, with a warning, so the bill does not invent input tax the supplier never charged.

The use tax page then compares the tax that would be due with what the supplier charged, which is usually nothing, and the difference is the accrual.

Metrics to track monthly

Compliance checklist items by severity
Exemption certificates expiring within 30 days or already expired
States at or approaching their economic nexus threshold
Draft filing periods close to their end date
Recent sales to customers with no address, taxed at your own location

Start with three metrics; trend direction matters more than a single point-in-time snapshot.

Spreadsheet rate table vs Biznsbook Taxation

Compare a typical rate spreadsheet and manual return with the same work in Biznsbook Taxation.

Capability	Manual / Spreadsheet	Biznsbook
Which bills	❌ Found at year end	✅ Suppliers marked Charges no sales tax
Rate used	❌ The head-office rate	✅ State, local and category rules at the receiving warehouse
Partly taxed lines	❌ All or nothing	✅ Only the gap, pro rata per component
Posting	❌ One lump journal	✅ Once per bill, tied to that bill
Return	❌ Typed in separately	✅ Read on the state return use tax line
Duplicates	❌ Easy to accrue twice	✅ Posted once per bill

Use tax and the settlement journal

Use tax accrued on bills is output tax for the return. When you mark the state’s period filed, the settlement journal clears it with the rest of the output tax to Tax Payable. Use tax you type on the return because it was not accrued in the books posts through Tax Clearing instead.

Write this into your filing routine, and revisit it when you register in a new province or state or change how tax is calculated.

Frequently asked questions

What does the use tax journal post?

A debit to use tax expense, which is the non-recoverable tax account, and a credit to each tax’s payable account. It is posted once per bill.

If I cancel the bill, is the accrual reversed?

Not yet. Cancelling a bill does not reverse its use tax accrual. Reverse it with a journal.

Can I accrue use tax on a draft bill?

No. Only posted bills can accrue. Post the bill first, then open Use tax.

Does this work with tax groups?

The Use tax button is on posted purchase bills in rules mode. It works out the tax due from the jurisdiction rules at the receiving warehouse.

How this differs by industry

Retail

A store that buys fixtures from an out-of-state supplier with no sales tax on the bill accrues use tax at the store’s warehouse, including the city rate for its ZIP.

Wholesale & distribution

A distributor receiving supplies into two warehouses in different cities accrues use tax at each one’s rate, because each bill is worked out at its own receiving warehouse.

Manufacturing

A manufacturer buying equipment from a supplier that charged part of the tax accrues only the gap, split across the state and local components that apply.