when receiving an invoice from a supplier for goods I have bought, I book these invoices as “Purchase Invoices”. These purchase invoices have VAT on them, to be precise it concerns Italy, so IVA 22%.
When booking these invoices, I notice that the VAT amount is added to the “Tax Payable” account, which is a “Liabilities account”. If I am correct the VAT paid on purchase invoices should be VAT receivable (“other assets” account) as this VAT can be claimed from the Tax department (or being netted-off against VAT payable).
I book the invoices as follow:
Account: suspense account
Tax: IVA 22% (build in code)
Amounts are tax inclusive: unchecked
Can anybody explain where it goes wrong?
I am booking the invoice in a incorrect way, or is it some kind of setting that needs to be changed in order to book the VAT of purchase invoices on VAT receivable account.
Next to that, in my Chart of Accounts I created a “VAT IN” and “VAT OUT” account.
To really solve my problem I would like to have the VAT (IVA) on the purchase invoices being booked on the VAT IN account, and the VAT on sales invoices (which I actually dont have) to be booked on the VAT OUT account. Then when settling with Tax department, I can net off the accounts and either book the receivable on VAT receivable or the payable on VAT payable.
Please enlighten me how I should do this when using the manager software.
Thanks in advance.