The tax payable account has negative balance. Is this normal? i’m afraid i did wrongly in allocating tax. The tax amount appear in the tax payable account, don’t seems to appear in my bank account statement. Any reasons for this?
If you check all your entries into the Tax Payable account you might notice what has caused the negative balance.
Also negative balance is common for businesses who are just starting (because they might be buying a lot of equipment). Or businesses who make mostly VAT-free or GST-free sales.
As @tony suggests, you need see what transactions are posted in your Tax Payable account. That will explain closing balance.
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Thats how my ‘tax payable acc’ looks like. each time gst is spent, i recorded it in such. am i doing it correctly or wrong?
When you charge/receive tax the account would be positive. It doesn’t appear that you have received any tax, therefore as you have only paid tax the account would be negative.
But can you clarify your statement “don’t seems to appear in my bank account statement”. if they aren’t appearing in your bank statement how are you creating these tax entries - what is your source information
@Brucanna. I’m being charged GST for all interbank transfer and cheque clearance… In the ‘tax payable’ account, itemised all the GST i have paid. As a healthcare provider, the local laws do not allow me to charge GST/tax to my patients.
The initial issue of ‘don’t seems to appear in my bank statement’ is now sorted. it was the way i allocate GST earlier (i wanted exclusive rather than inclusive).
Negative tax payable means you will be receiving GST refund. Which makes sense. You pay GST to suppliers but don’t charge GST to customers. You might as well go to Chart of Accounts and rename Tax payable account to GST receivable and make it an asset account.
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Ok that would mean that the GST will be reimbursed when you lodge your returns. When you get that refund, deposit it to the tax account, or, is that payroll liabilities also tax payable - if yes then you would Spend Money 1.45 with first line entry to Payroll Liabilities 2.30 and second line entry to Tax Payable -0.85.
Also can I suggest you use clearer titles on your accounts - instead of Tax Payable use GST Tax and Payroll Tax if that’s applicable.
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@lubos and @Brucanna. GST paid by me will not be reimbursed (special law for healthcare providers in my country)
@lubos If money is being spent (for GST) why is there a need to “go to Chart of Accounts and rename Tax payable account to GST receivable and make it an asset account”? Seems contradicting, isnt it?
The ‘positive’ figure of ‘payroll liabilities’ of 2.30 was a miscalculation on my part in paying for my employees EPF/CPF (a compulsary retirement fund for all citizens). This will ‘disappear’ when I pay this due this month.
If you are not charging GST and paid GST to suppliers cannot be refunded, you shouldn’t be using Tax Codes at all.
This way you don’t have any Tax payable account since there is nothing ever to pay or be refunded.
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I see. Where should i indicate my GST payment then? Expenses?
What do you mean by “GST payment” ? Do you mean when you pay supplier and they charge you GST, how to categorize it? In that case, you allocate the whole amount paid to an expense account.
For example, if paying for a telephone services where the price includes GST, you allocate the whole payment to telephone expense account.
GST here refers to bank charges that are GST taxable.
For example, if i pay a supplier for $100 worth of products with a check, i’ll be paying $100.53. $0.50 is bank charges for check clearance and $0.03 is GST on the $0.50.
Another example is, if i pay a supplier online, for $100 worth of products, i’ll be paying $100.11. $0.10 is bank charges for ‘interbank transfer’ and $0.01 is the GST incurred on the $0.10
In this case you simply allocate $0.53 to bank charges.
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HI I’ve been processing Purchase invoices which 90% I’ve paid gst on. This is showing a negative balance in Liabilities. I am not registered for gst, i do not charge it to clients but pay for it on purchases. Most items I purchase is a Fixed Asset. I would like the tax payable to show as an expense (as a total) What can i do?
if you are not registered then you would not be able to get tax returns. in that case you need not enter the purchase invoice with the tax selected. you just create a sub-account under Expenses in your chart of accounts say Tax paid. then when entering a purchase invoice, allocate the tax value as a separate line and select ‘Tax paid’ under accounts column.
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In this case you shouldn’t have under Settings - Tax Code any code selected - it should like this
If it doesn’t then you need to delete any codes being displayed. Now tax fields wont be displayed when you do any transaction entries. When you have expenses just put the total of the invoices (cost + tax) to the expense account.
But before you can make that change you need to edit any transactions with tax allocations
Click on the transaction blue figure and they will be listed - just click the “x” next to the tax code so "no tax appears and make sure that the “unit” equals the Invoice total.
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Regardless of your tax registration status and whether you should be using tax codes or not, Tax payable is a liability. The account is hard-coded into the program when you enable tax codes and records the net of money you have collected on behalf of the tax authority from customers (and thus owe to the government) and offsetting taxes you have paid to suppliers (that reduces what you remit to the government). Tax payable is never an expense of your company. It is money you hold in trust for the tax authority.
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Thank You to you all, much appreciated