Company Income Tax is paid once in a year at the end of each financial year on the total profit made by the business from the previous year. It is 30% of the total profit. Most times this is used in neting off the Withholding Tax of the previous year. My question is can will the CIT be posted?
First, you need to create a BS - Liability account called “Provision for Company Tax”.
Then by Journal you would transfer from Retained Earnings to Provision for Company Tax an amount equal to 30% of your Profit - this amount may have to be adjusted based on your Tax Return Profit which can be different from your accounting profit.
Then by Journal you would transfer any Withholding Tax to the Provision for Company Tax.
Alternatively, if the Withholding Tax is a form of advanced payment of Company Tax, then you could use the one account - Company/Withholding Tax.
Additional considerations may apply. Depending on the tax jurisdiction and form of organization, some businesses should not record tax as an expense. Nor should some make provision for taxes. In some jurisdictions, all company profits are passed through to sole proprietor/trader owners for reporting as personal income. And partnership profits are often passed through to the partners for reporting on their personal tax returns.