Tax field in add account example?

1

In the guide here: https://www.manager.io/guides/9812 it says that:

Select a Tax Code if all or most transactions posted to this account will have the same tax code applied. For Balance Sheet accounts, this field is often left blank.

Can someone give a scenario where, when creating an account, this field is not left blank i.e. it is needed to enter a tax code? Thanks.

2

Yes. Suppose you create a new income account to record taxable services that will be accounted for using the Billable Time module. Billable Time entries do not permit tax codes to be applied, because they are not taxable transactions until invoiced. Taxing the time entry itself would distort your tax payable. So you set the tax code for the income account. Then, every time you invoice (from the Customers tab), the tax code is automatically applied.

3

Thanks @Tut.