Is there a way to add a line on a sales invoice with tax payable as the account? My invoicing is carried out in a separate POS system, so I use a sales invoice to input my sales figures on a daily basis. I have a sales tax rate configured, but not all my sales are taxed, so I need the ability to add a separate line to account for the actual amount of tax I collected. Any suggestions or workarounds?
Two points:
- Tax payable is an automatic account linked to taxes collected or paid using tax codes on sales and purchase invoices. Taxes paid offset taxes collected, because the concept is really designed for VAT schemes. So you cannot post a line item directly to Tax payable on a sales invoice.
- You should not be using sales invoices to record POS summaries. Sales invoices create accounts receivable for defined customers. Although you could designate your POS system as a customer, if you invoke POS for a sales invoice, the POS then owes you money. But that’s not what you are trying to record. Instead, you should just enter a Receive Money bank or cash transaction. On that, you will be able to select Tax payable. So you would enter total, untaxed sales for the day on one line, posted to a sales income account. On another line, you would enter collected sales tax for the day, posted to Tax payable
When you remit collected sales tax to the tax authority, use a Spend Money transaction, posting the payment to Tax payable.
I realize sales invoices aren’t the textbook way to do it, but it works well alongside imported bank statements. The deposits work as “payments” against the acct rec account set up for POS sales. This was how I did it in Sage for another business, and it worked perfectly.
So how would I make this work alongside imported bank statements?
Instead of a daily Sales Invoice do a daily Journal Entry using a BS > Asset > Daily Takings account (or POS)
Then for the import bank statements deposits use the Daily Takings account in the Bank Rule.
I was really hoping to avoid making daily journal entries, it’s just not a great accounting practice. Makes a bit of a mess. Manager is nifty, but I unfortunately think I’m going to have to go back to something professional. Thanks for the help.
Are you in Australia, if yes, then there is another option.
I’m in Canada.
Ok then what you need to do is create a Custom Tax Code for 100%, then any amount entered to that code goes directly to the Tax Payable account - I called the Code “POS”
Use it in the Sales Invoice
And it gets posted to the correct account
That is excellent! A perfect work around. Thank you so much!
This technique is covered in the Custom Tax Codes section of this Guide: Manager Cloud. Financially, the process is identical to the approach I described in my second bullet point. But it requires the creation of the custom code.
Paying off sales invoices with imported bank transactions is also unnecessary. If you want to accomplish this with imported statements, you can use bank rules to assign transactions directly to the income accounts and edit them to include your tax line. I just think you are introducing extra steps by going through sales invoices and Accounts receivable, since there is no extension of credit to customers.
Had to have the last word, Tut? Brucanna answered my question perfectly and with clarity, something your answer lacked. No need to post a “I said it first” type of post. It served no purpose and wasted everyone’s time.
Not if you consider that Importing bank transactions involves both receipts and payments, so if the daily sales had been taken up via a Receive Money then there would be duplicate transactions after the import which would need to be managed and deleted. Paying off sales invoices eliminates this duplication.
This is assuming that the deposits will exactly match the daily sales. If the day’s sales was 5,490, but the deposit is only for 5,000 then it would be very difficult to match sales & taxes to that deposit via the imported transaction. Once again the sales invoices eliminates this mismatch in deposits.
I concur that for both of the above, using a Cash Account would be the alternate approach to avoid these conflicts but then this adds in the extra dimension of Inter Account Transfers, something again which the sales invoices and depositing eliminates.
Customers don’t have to be third parties, you can have in-house Customers. In this case the “POS system” owes the business bank account money for sales that it has recorded. No different to a Cash Register float account accept asset classification.
The approach may not be traditional but the accounting is not broken and I acknowledge that the user understands what processing is best for their business.
No. And I’m sorry if I wasn’t clear enough. But thank you for your concern for keeping this forum from becoming a place that wastes everyone’s time.
If you don’t mind my asking, how could my post have been clearer? I was attempting to point out (partially for the benefit of other readers, not just you) that there is a resource available in the Guides on the subject of 100% custom tax codes. That’s one of my responsibilities as a forum moderator. I was also trying to make the point that creating accounts receivable and then clearing them with imported transactions, rather than posting the imported transactions directly, might be unnecessary work. Your suggestions on how I could have conveyed those ideas better would be welcome.
Meanwhile, I’m glad you obtained help you found useful.
I wasn’t suggesting doing both. Since @wm55401 apparently wants to enter transactions via imported statements, I was only suggesting doing away with the intermediate step of sales invoices and posting the imported transactions directly to their appropriate accounts. So there would be no duplicates to delete.
Yes, in a way it does. But that was @wm55401’s implication when saying that the process worked perfectly in Sage. Whether there are intermediate sales invoices or not, if everything has been working out, that tells me the bank deposits are evidently matching sales. It was not made clear how that can happen on a dependable basis, given delays in processing payments of various forms. But the nature of @wm55401’s business operations was also not mentioned.
The user can make any choice desired. Other readers, however, might want to make different choices that are more traditional.
Yes, but this suggestion was based on “your” own assumed assumption that the deposits will exactly match the daily sales, which you later acknowledged in your response “Yes, in a way it does”.
Unsure how you assumed this assumption as @wm55401 own statement states “The deposits work as “payments” against the accounts receivable account”, i.e. payments against the account, not against sales.
I would conclude that it’s no different to how a “Cash on hand” account would operate where the daily sales are entered via a Receive Money and ad hoc amounts are transferred to the bank accounts - such amounts would rarely equal daily sales values.
Or other readers may learn of an alternate (modern) approach.
In fact, I have already swapped one business operation over to this process as it’s simpler for non accounting minded staff. All that’s required now is a 1) Sales Invoice for the daily sales and an 2) imported bank statement deposit with a bank rule, compared to previously where you had a 1) Cash Account > Receive Money for the daily sales, 2) bank statement deposit with a bank rule and an 3) Inter Account Transfer.
They can still reconcile the Cash Register float against the “Customer’s” Accounts Receivable balance and once a year that balance will be converted over to a Cash on hand balance so that there is compliance with the traditionalist.