So i have a invoice that is $356.20 and my sales tax is 5.5% so 356.20x.055=19.591. Manager is rounding that to 19.60. Is this what manager was designed to do?
I ask because when it comes time to remit the sales tax my liability account will come out .01 more then what i will actually owe on just this 1 transaction. When this adds up to many transactions we could end up a long ways off.
What is your local currency and how many decimal points does it have?
USD and we only have 2 digits after the decimal. So $0.00
Also manager version is 22.12.24.573
You may need to update Manager. I just attempted to replicate your transaction in a test business in version 22.12.29.575 and Manager rounded to 19.59.
@iamlost, you don’t say what line items make up the sales invoice. Manager calculates tax line item by line item and rounds each line item to the precision of the currency. That may give a different result than totaling several line items and calculating tax on the total. This method is used by almost all accounting software and is completely in compliance with laws everywhere.
Post a screen shot of the Edit screen of the invoice.
I checked on a even older version from over a year ago it did the same thing. But here is a screen shot of the version i have now.
Here is the edit screen tut
I am also using the desktop version of that matters at all.
Good point by @Tut, the calculations are done at line level and not at invoice level.
So, based on the screenshot you just provided, the calculations are correct:
| Line | Pretax Amount | Tax @5.5% |
|---|---|---|
| 1 | 175 | 9.63 |
| 2 | 32.61 | 1.79 |
| 3 | 137.02 | 7.54 |
| 4 | 8.87 | 0.49 |
| 5 | 2.7 | 0.15 |
| Totals | 356.2 | 19.6 |
Well if that is what it was designed to do how would i compensate for the $0.01 off it will be? Sales tax is calculated off the total sales for 3 months of time. If i had to pay sales tax right now the states amount will be $19.59 while manager will have it counted as $19.60.
And that would even introduce further rounding differences whether you were rounding the line or the subtotal level.
Tax rounding differences are unavoidable. You can create a Journal Entry to write-off the tax rounding differences to your Profit and Loss.
Yes it would introduce further rounding differences. It gets even worse because the state rounds the the untaxed and taxed income totals to the nearest dollar then figures what i owe. lol
Journal entry sure makes sense to use. I will talk to my accountant for the proper way it will be handled. Just in case it needs to have a specific name or something.
I only just learned of this because we was not using a liability account for sales tax until 3 months ago. Sales tax was just under income and then deducted as a expense. That meant any rounding was just part of the income if it was on the + side or as a expense on the - side. So i never noticed a difference and well i was not the person running the software at the time either.
Thanks everyone for your help! I am still learning and just wanted to be sure it was the way the software was designed to be.
Are you sure your jurisdiction actually requires you to do that?
Why not just pay the amount of sale tax calculated by Manager for the last 3 months (which is the sum of the line items). I believe most jurisdiction allow the latter method.
I am really sure as the first line states “Gross sales and services” 2nd line states “Net taxable sales” And from there on it is calculated for me. I drove a 2 hour round trip to a local accountant just to show me that. Even had the accountant right it all out for instructions in case i ever forgot. There was no mention of me using my own calculated tax amount. So if there is well i don’t know about it.
I will send you a message with more detail Patch as i don’t want to have Tut on my butt AGAIN about this topic getting off from the software and into specific jurisdictions requirements. I do appreciate you bring it up in case i do need to ask my accountant about it.
Then why are you worried about 1 cent? You overlook the fact that on some transactions, the line-item approach will produce a penny over the approach of calculating tax on the total, while on others it will be a penny under. Over a filing period, those will tend to cancel out, so you would be just a few cents different. Why do you think your state rounds to the nearest dollar? Because they are well aware of the differences that arise between computerized and manual calculation methods. And they don’t want to deal with them.
I guarantee you, your account is not the first time your state tax authority has seen this issue.
Adding a rounding line item to a general profit and loss account can be used in the payment to the tax authority to full balance the tax liability account.
Because .01 adds up over several transactions to dollars. Yes i am sure the state gets it however i just was not sure how to deal with it within the program. Here is what you Tut told me in another thread about handling sales tax in manager.
In order for it to show me having no liability as you stated i have to do something with what ever is left in the liability account. What the state calculates i get paid for collecting it and what i will actually collect will be 2 different things if i was to just send any extra there by using that journal entry. Just leaving the extra there will still show a liability. I will ask a actual accountant about this for my jurisdiction rules.
Also yes i am sure some of it will cancel out but at the same time in just 3 months i had gained more then $1. So what is that about a overlook. I can literally see the results thus came to ask about it and got my answer.
Lastly you are taking this thread off topic and into jurisdiction rules which you normally tell me not to do and have locked my threads and sent private messages because of that. Please do not continue. My question has been answered i marked a reply as a solution i now know the software is designed to be this way and there is nothing wrong with it being this way. I also got some advice on ways to handle it within manager. I think i am good to go far as what can be said on this forum with the rules you have laid out for me.
If someone has anything they would like to add that is not related directly to manager i welcome them to Private message me. I do appreciate the input.
Again thank you to everyone for your help!!!
I was thinking the very same thing. I will probably need to make another thread for how to properly implement it though. I am not that smart about it.
I am glad the issue is resolved to your satisfaction.
