Love the software so far, I’ve started moving everything to Manager and it’s just a breeze.
One small problem I have noticed is that the total tax amounts are sometimes not being calculated correctly. So far I’ve noticed it in the Sales Quote and Purchase Invoices sections, but it may also manifest itself elsewhere; I haven’t got that far yet. I have a Custom Tax Code of 13%.
Here’s an example: I have a Purchase Invoice with nine items. Tax applies to all of them, and the Amounts are tax inclusive box is unchecked. The sub-total is $415.98, but Manager is calculating the tax at $54.06, when it should be 415.98 * 0.13 = 54.0774 (which should obviously be rounded to $54.08).
Three of my 23 Purchase Invoices exhibit this behaviour, as does my only Sales Quote.
Manager is calculating tax amount as per each line item. This method has been chosen because it is used by every other accounting software on the market most notably Quickbooks.
When you are preparing invoices by hand, you would tend to calculate tax on total amount but in double-entry accounting software each line item is posted to general ledger separately therefore tax amounts need to be rounded on line item level. As a result, you might end up with slightly different total tax amount (a few cents difference due to rounding)
Every tax authority in the world I’m aware of, accepts both methods of calculating tax amounts and if you would try other double-entry accounting systems, you would see them calculating the tax the same as Manager.
Thanks for the explanation, lubos, this is very clear.
This will be fine for future transactions as they will be done in Manager from the start, but I have two situations where I think I’ll need to find a sort of workaround:
entry of past customer invoices from another system
entry of all purchase invoices
My suppliers don’t seem to use the method you described to calculate taxes. Their invoices don’t match my transcription of their invoices into Manager.
I’m afraid I don’t know enough about accounting methods to be able to handle these two situation.
My supplier also calculates the tax from the total as opposed to per-item. Is it an issue that my purchase invoices in Manager are off of the invoice my supplier gave me by a few cents? Is there a way to work around this?
to see how I do it and what Lubos suggests. As I use inventory or Purchase Invoice Items which are all set ex vat, I just modify the amounts of the items by a penny or two either way to get the required totals to tally up!