Booking Tax payments

every 3 months I have to pay VAT that I have received on outgoing invoices.
how should I book it so that the counter is back to zero at the beginning of each period.
but if I have to receive he must remain negative (yes you must pay every 3 months, if you have to receive that is once a year)

someone any advice?

Now I enter it as an incoming invoice with no VAT so the bank account is correct but the VAT counter is not correct.

greetings en thanks

You should not be creating a purchase invoice for your tax bill, because that increases Accounts payable (a liability account). The liability to pay the tax authority is already recorded in Tax payable.

Instead, you should enter a bank transaction, spending money. Post the payment to Tax payable. This will have the effect of moving the Tax payable balance in the negative direction. (Whether the balance is actually negative or positive will depend on how much you are due to receive from the tax authority for VAT you pay to suppliers and the timing of payments versus reimbursements.)

Note, if you only collect VAT from customers, but never pay VAT to suppliers, Tax payable will always be positive until you make your payment. Then it will decline to zero. But that is rare. The Tax payable account operates by offsetting input and output VAT. And there is usually lag time between entry of purchases and sales and transactions with the tax authority. So you generally cannot just pay the balance of Tax payable to the authority. To know how much to actually pay, you will need to consult the various tax reports under the Reports tab. There, VAT from sales and purchases will be separated.

thanks for your response,

This was what I was looking for, but it is a bit strange that he only included the summary VAT after I booked it as a bank transaction. so only on the date of receipt and not the invoice date. and the taxing use the invoice date.

I am not certain what you mean by this. You may be referring to differences in accrual versus cash basis accounting. See this Guide for more information: Manager Cloud.

I think you may also misunderstand terminology used by Manager. There is no “receipt” involved in the situation you described, because receipts only record money coming into the business. “Payment” is the term used in Manager to refer to money going out, such as your payment of VAT collected from customers to the tax authority.

“Invoice” refers to a demand for payment from a customer. I don’t believe your tax authority issues you an invoice, because it does not know how much tax you owe until you file your information. A sales invoice creates an asset in_Accounts receivable_. An invoice from an outside entity is entered in Manager as a purchase invoice, creating a liability in Accounts payable. But the liability to pay collected VAT already exists in Manager in the Tax payable account, as I mentioned in my earlier post.

Circling back to my first point, if you use accrual basis accounting, the tax liability appears as soon as you create a sales invoice. If you use cash basis accounting, it will not appear until you receive money.

In Ireland, our VAT return does not allow cents only euros. I am Treasurer of a small business which collects less VAT from customers than it pays out to suppliers, so our Tax Payable account is generally negative/has a Debit Balance.

I have set up the Revenue as a Customer and when I prepare the return on 31 Dec, I do a journal entry Debit the Accounts Receivable/Revenue with the euros amount, debit the remaining cents to a General Expense account and credit the Tax Payable with the full amount.

This zeroes my Tax Payable account in preparation for the next year and shows the refund as an account receivable awaiting the Receive Money transaction when the Revenue refund us the VAT due.

Our accounts are done on an accrual basis, of course.

I’m sorry, I think my bad English is the cause of the confusion.
You will find tax payables on the summary page under the Less liabilities tab.
now I have sales invoices that have not yet been paid by the customer (so not yet booked as a bank transaction) but I have already paid VAT on because the period has been closed. but as long as no bank transaction is booked, the VAT from the sales invoice is not included tax payble couter.

hopefully this is clearer

Are you using accrual or cash basis accounting under Set Period on the Summary page?