# How to account for corporate tax

**URL:** <https://forum.manager.io/t/how-to-account-for-corporate-tax/390>\
**Category:** Uncategorized\
**Created:** [January 19, 2014, 1:07pm UTC](https://forum.manager.io/t/how-to-account-for-corporate-tax/390 "2014-01-19T13:07:32Z")\
**Posts on this page:** 1\
**Showing post:** 2

<div class="post-metadata">

**Author:** ![lubos](https://sea1.discourse-cdn.com/flex019/user_avatar/forum.manager.io/lubos/32/62798_2.png) [@lubos](https://forum.manager.io/u/lubos)\
**Post date:** [January 19, 2014, 1:12pm UTC](https://forum.manager.io/t/how-to-account-for-corporate-tax/390/2 "2014-01-19T13:12:58Z")

</div>

First, create two accounts in your `Chart of Accounts`:

- `Income Tax Payable` under `Liabilities`
- `Income Tax Expense` under `Expenses`

Then create new journal entry to account for income tax expense, let’s say the income tax is $1,000

- Debit $1,000 to `Income Tax Expense` account
- Credit $1,000 to `Income Tax Payable` account

This will bring your $1,000 into Profit & Loss Statement.

When you pay income tax to tax authority, it’s simple cash payment transactions that will have to be categorized as `Income Tax Payable` so your tax liability comes to zero once the tax is actually paid.

---

_[View the full topic](https://forum.manager.io/t/how-to-account-for-corporate-tax/390)._