Hello, I am looking to start off using manager.io (server edition - ARM build, version: 25.5.28.2360) for a new software & hardware consulting firm.
I need help with the following queries. I am new to business accounting and it’s concepts and so would appreciate an ELI5.
can any Canadian users share their setup of tax codes? I am from British Columbia and would need GST as recoverable and PST (only track) tax codes setup. I have already setup the tax % as custom tax codes but with the default “Tax payable” liability account
I did look up the forums and post/replies are really old. It definitely feels that there have been a series of good feature changes and bug fixes done since then, and that the features could be hidden and as a user I am not approaching/using them properly (e.g. no where can I find the billable hours feature enablement how/to until I went through forum threads, looked up old guides/pages and added the non-inventory item of Service/Hours.)
Looking for the recommended way to setup Canadian GST (Tax payable account seems to handle the auto-deductions correctly) and PST (tracking for now and then later also to be in it’s own liability (those recoverable) and expense account (non-recoverable) - but as I understand tax codes ONLY allow a liability account which will likely* become a limiting factor for automated operations to operate on PST. But this could be adjusted applying and NOT applying applying tax code - and just entering the amount for non-recoverableS under respective expense account i.e. tax inclusive - or similar to what I have done below using zero % tax rate.
So far, I have the default setup “Tax payable” liability account through a custom tax code for GST. This allows for both Sales Invoices and Purchase Invoices to be operating on the same $ account. Nice! (? it seems that the Canadian Revenue Agency, allows to enter the reduced amount to be declared under ITC - for “things” which are exempt - which is to say you can reduce the amounts as demonstrated by “Tax payable” default account functionality between sales/purchase invoices - if purchase item(s) are exempted. Please let me know if you know this does not feel right!)
And another account to track PST paid via Purchase Invoices. I went through some forum thread and could not determine what to use between 100% pass through v/s zero % tax rate types, but after trying out both it seems that zero % rate was more aligned to what is needed. Doing this allows to track the PST amount paid through business purchases and yet still not touch the default “Tax payable” account. (again, please let me know if that does not feel right for this scenario).
From Screenshot: But the Purchase Invoice layout seems to be confusing.
From Screenshot: Purchase Invoice:
From Screenshot: and it’s configuration:
Incase of checking the option to show tax amount column, looking at the right most column gives an impression where Total of 210.00 & 14.00 shouldn’t be just 214.00, but rather 224.00.
The additional amounts row where it mentions 214.00 and 10.00, just adds to the confusion.
How can I fix this (baring using the deprecated feature of invoice themes?) because, disabling the option to show tax amount column creates another confusion where looking at the last column total does not show the actual total after adding GST, but rather is split in following lines for sub-total and then applicable GST 5% - which looks much cleaner.
Is there a way to hide showing the “Tax” column ? I think it could be a neat solution to this layout.
TL;DR:
Please share how you have setup similar tax codes (recoverable v/s non-recoverable) and for both Sales Invoice and Purchase Invoice. Canadian context (British Columbia) would be extremely helpful. Thanks for your time!
Thanks!
Tax payable is a liability account, but is there an issue with using this default account for GST only (sales invoice & purchase invoice) as it is recoverable?
I won’t be collecting PST (exempt for consulting services) and hence not a liability at the moment, but rather only need an expense account to keep track of PST paid through expenses (own sake).
If in future, PST is collected then a liability account would be suited. But I think I see why you are trying to recommend a liability account from the get go - but usually if not collecting PST, the PST amount is put as part of the expenses.
The primary issue I think still seems to be how the invoiceS (specifically purchase invoice) breakdown the various amounts and display tax entries as I mentioned in my post.
The default Tax liability account is just a placeholder. It can not be used when you record the GST payment to, or refund from CRA. So, you must create your own liability account in the Chart of Accounts.
Thanks! I didn’t knew this and will create another liability account for GST.
Can you please also share how did you solve the invoice issue I noted ? This invoice layout definitely stands out.
I’m not from Canada so not familiar with the taxation system there but have you considered using a Multirate tax code to simultaneously calculate and apply the GST as well as the PST.
Accounts for each will still need to be set up.
Doing so may achieve an acceptable invoice format for you.
See the old guides section 4.3 https://www2.manager.io/manager.pdf
No worries at all @Patch!
I did try multirate tax, but quickly realized that it won’t work since PST is not being collected/paid out and rather only being tracked as part of expenses, albeit in a separate expense account for ease of tracking.
Ah…the lofty PDF, thanks for the reminder! I can try referring back to it, but at a quick glance I did see a proper breakdown of the tax amount and TBH I liked the old guides :]
It seems that I might have stumbled over a new bug with the purchase invoice layout?
That’s about right. And adding PST under a multirate custom% taxcode would essentially force it to be under a liability account. Which is the where it won’t work for the scenario.
mmm
Looks like Manager does force tax codes to use a Balance sheet account / Don’t allow selection of a Profit & Loss account. Which guess is inconvenient while you analyse the value in registering for PST.
Maybe use a different GST Code such as “GST+” for purchase transactions with PST (to tag the transactions) and post processing (using Managers tax report) may help
It seems that the only simple solution would be to use a Multiple rates tax code. Then periodically use a journal entry to transfer the balance from the PST liability account to an expense account.
I do wonder if your desire to track non-recoverable PST separately from the underlying cost leads to a misleading presentation. For example, if you spent 1000 on internet services plus 7% non-recoverable PST, then should not the cost of internet services be recorded as 1070? Perhaps someone more knowledgeable can comment, or ask your accountant.
I think we have better options as I described above, no?
I think I might be confused between: including PST amount literally with the base cost together under two expense accounts v/s doing the same but in the very same expense account wherein PST amount is not either via taxcode or in a separate line.
The later can still be tracked? pass through 100% ? but would still fall under what you are pointing as misleading ? I will look this up.
Thanks for the help! : )
I still need to see if this fixes the purchase invoice layout issue I noticed.
