Tax Payable

Hi everyone,

First off, love the program. Its great and I’ve sort of got myself up and running.
second. I hate Accounting! I have no idea what I’m doing.

I have an issue which I’m completely lost over.

I live in Canada Ontario where the TAX is HST @ 13%.I’ve have setup the tax code for 13% and created several invoices which automatically calculate the HST and all is good.

I have expenses (such as Godaddy etc) which are paid via Credit Card and I record these as expenses (Don’t shoot me if this is wrong, I’m learning).

When I click on the Summary Page and look at my ‘Less Liabilities’, the Tax Payable is -700.00 for example. When I click on the figure, it displays all the transactions, however, in the debit column is $13.00 for each entry. so what appears to be happening is for every transaction a debit of $13.00 is applied.

What the hell did I do? or not?

Thanks for the help.

I’d have to see a screen shot of an expenditure transaction to be sure, but it sounds like you entered 13 as an amount rather than as a tax code. But normally, you shouldn’t be doing anything with HST unless you charge it to a customer. From your perspective, it just increases the price of whatever you buy. So you enter the full amount of the purchase, including sales tax, and you’re done.

Can you post a screenshot which displays those transactions so we get a better picture?

Is the credit card a business or personal card. If a business card then set it up under Cash Accounts tab, but if its personal then you can you use the Expense Claims tab to take up the relevant charges

Tax payable should show on the Summary as a positive number. It’s a liability account, meaning you owe that amount to someone, in this case, the tax man. But you don’t, because you paid it to the merchant, who is a collection agent for the government. Since you were spending money rather than receiving it, the transaction ends up being reversed. But as I said in my first post, you shouldn’t be applying this tax code at all.

For sales taxes, a tax code calculates an amount that is either added to or already part of the sale price (depending on whether the tax is stated as inclusive or exclusive). Manager calculates and segregates the tax in the Tax payable account. When you file your tax return with the government, paying the tax you’ve been holding in trust for them on behalf of your customers, you would allocate the expenditure to that account and zero it out.

Unlike some complicated taxing schemes, sales taxes are relatively straightforward. The important thing is that they are levied on the end user, but collected by the merchant. Unless there is some unusual offset scheme for certain companies or products, the tax payable amount is not reduced by any tax you pay on a purchase, so there is no point is accounting for it separately. Even if there were, tax codes would not be the way to do it in Manager.

That’s probably more than you wanted to know. So post a screen shot of an expenditure transaction and we’ll get you sorted out.

Hope this explains the issue better.

Thanks for the reply. Yes, Credit Card is Personal.

FECK! I figured it out. I think. I had ticked the box for Flat Rate 13% within the Tax Code. When I untick this everything seems to be correct. I need to check. Picture attached.

With it unticked I get this now.

Aah, the trouble a tick can cause

I’m confused. As I reread this thread, I wonder what the credit card–no matter whether business or personal–has to do with HST. Was that a totally separate issue that both @Brucanna and I have conflated with your tax question?

I thought you were asking about applying HST to things you were purchasing with your credit card. But your first screen shot shows only line items from sales invoice #5 (or possibly from several sales invoices all manually edited to #5). The second includes a bunch of expense claims. Those certainly did not magically appear as a result of unpicking the flat rate tax box. So I’m missing something.

Also, I asked for a screen shot of the transaction involving the tax. What you posted are two versions of the Tax payable account ledger. They do not resolve what is going on. I have a sneaking suspicion you may still be headed down a rabbit hole. So please post a shot of the screen where you entered one of the troublesome transactions.

Can someone please help me. Why my Tax Payable became 0. What happened? Are there any changes? Please I need help

The first question is what version number are you using?
The second question is what dates are set for your Summary page. (Look under Edit.)
The third question is how did you define your tax code, VAT @ 5%? Post a screen shot of the Edit screen for that tax code.

Check that your tax codes are associated with the Tax Liability account in Settings

This was changed some time back

It sounds like you updated from an old, old version