I have a doubt about how can I or should I record some transactions for non-employee compensations. In my country we have this annoying law about “professional services” that require us to retain a 7% of amounts paid to professional services above $1,500 (yearly). For example, you have your accountant, or your lawyer and they bill you at the beginning of the year $500. You should not withheld the 7% but when in the second month they bill you $1,000 there’s the limit, so when you paid them for their services after that $1,500, all payments should have the 7% withheld. Additional, last year the government also pass a law about a special service tax of 4% that your supplier should bill you and paid to the governmental agency. So an example of a transaction, so you can visualize it better, should be like this:
Gross 1,000 7% withheld (70) 4% service tax 40 Total to be paid 970
So in the end, you will pay the 7% you’re withholding and your supplier should pay the 4% of this amazing new special law… what my question is, the tax module should work in my case? I know that I can set up the tax module to function for the sales tax but when I set up the different sales tax (because service is 4% and sales is 11.5%) the module ask me for a payable account. I have set up this part to an expense account because I can’t take the 4% as a credit for the amounts I earned.
Another question is, this whole “professional services and 7%”, we have to track this amounts because at the end of the year I have to file a form that indicates how much I paid to every supplier and how much is the 7% withheld, and additionally make a reconciliation form about the 7% and the payments I have emitted to the agencies about this withhold. Is there any way that I should use to track this amounts that maybe I’m missing? I have to export the Professional Services account and the account dedicated to this 7% to track this so I can file the necessary forms to the government.
About the employees module, I would love to know if there is any plan to add more reports in the future and the functionality of calculate deductions with formulas.
Thank you for your time and any advice you could give me. Cheers!