My Manager Summary dashboard lists that I owe $153 in Sales Tax. What is the proper method of showing that as paid in Manager?
Also, the state has an adjustment that should be applied to this amount before paying. How do i record and apply that?
To clarify, the sales tax shows under my Summary page in the Liabilities section as “tax payable”?
How do I properly record this as paid? And how do I first adjust this amount to reflect the vendor’s compensation the state gave me?
Thank you.
I was able to create a Payment to the state, creating a Liability account for them and posting a payment to it. My Liability has been reduced by the amount paid, as has my Assets (Account Balance).
The problem is that the Liability line item showed what I owed the state in sales tax before the Vendor’s Compensation the state gives me. So when I pay the amount I paid the state, it leaves the vendor’s compensation amount sitting in the Liability section.
I want to be able to adjust this amount off, but doing so via a Journal Entry leaves it in the Suspense account section. How do I adjust a Liability amount off, using something that isn’t a payment?
To balance the accounts in Manager, you have to enter all the transactions which achieve the balance in real life.
For similar transactions I use a multi line transaction in Manager to enter all components of the tax authority transaction.
By the way, what country is this for? As other people maybe able to give more specific advice.
Thank you for the reply. This is in the United States.
During setup, I created Tax Codes for my services. It is a simple 6% on selected services, with no variation of that. The item tax shows properly on sales invoices and the total tax to be paid shows correctly under the Liability section for that tax item.
If this was the correct amount to pay my state sales tax, everything would work perfectly. But the state gives me a Vendor’s Compensation, a small deduction from the amount owed for collecting & paying this tax. That amount is not set until I report the amount of gross tax collection to the state.
(gross tax collection/Liability) - (Vendor’s Compensation) = Amount Paid
So, when I pay the actual amount to the state, there is a small amount left in the Liability item for Sales Tax. What would be the most efficient way to account for the fact that my actual payment will be always be less than the Liability item, and to balance out the remainder amount to zero?
I tried using a Journal entry. It’s working close, but not quite right. The amount, $2.68, to be adjusted out originally appeared under Liabilities in the “Sales and Use Tax” item. If I add a journal entry for that amount it does zero it out but it shows as a Suspense amount under the Equity section. And it shows as Unbalanced.
I created a “Vendor’s Compensation” item under Liabilities, then added the amount before adjusting it back out. This only serves to better create a category for it when doing reports or tracking it. But the amount of $2.68 still shows in a Suspense account as Unbalanced.
I assume that is because, ignoring the newly created Vendor’s Compensation item, the amount left in “Sales & Use Tax” isn’t in the Journal prior to adjusting it out? But if I add it first, then the amount in Sales & Use Tax is doubled because it was already under that item in Liabilities.
Advice please?
The “Vendors Compensation” adjustment reduces your liability for Tax Payable and becomes Income, so the Vendors Compensation account you created should not be a Liability account but an Income Account.
Then Journal:
DR: Tax Payable (liability account) $2.68
CR: Vendor’s Compensation (income account) $2.68
I find using exactly the same lines within the payment transaction cleaner
| Account | Description | Amount |
|---|---|---|
| Sales & Use Tax Liability account | Gross sales tax 2025 Q1 (6%) | $153.00 |
| Vendors compensation Profit & Loss Income account | Vendor amount as per tax authority (negative receipt number) | -$2.68 |
| Bank account selected for payment transaction | Payment transaction net amount | $150.32 |
Note enter the $2.68 as a negative number when entering this as a two line single payment transaction in Manager.