What to do with taxes already paid to the state?

So i setup a account under liabilities for the tax collected from sales and services after some research online but what do i do with that money after it has been paid to the state? I have to pay it in every 4 months.

Record the payment Record a payment | Manager

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And post the payment to the tax liability account. This is explained in the Guide about using tax codes: Create and use tax codes | Manager.

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I see my mistake here. I never setup a bank account so no wonder everything ended up so hard to figure out. I also didn’t know i could just post a payment without having a place for it to go. I had read that tax code thing over and over but i never understood it. maybe because i see the VAT and i have no idea what VAT is so i assume that must be something for a country i am not in lol Thanks both of you Joe91 and Tut. I knew it had to be simple and probably my mistake. This is my first time ever messing with a accounting software and being it is not quickbooks no one i know has any clue about it. But quickbooks does not work on linux operating system. Again thanks guys!

I just run into another issue probably simple again and being a novice. How do i get the portion of the taxes collected paid to myself for collecting it? My state pays us a % of the tax collected so i would need to show that as income.

I hope this was a misstatement. You should say that you cannot just post a payment without having a place for it to go.

The closest equivalence in your country is sales tax. The biggest difference is that value added tax schemes offset VAT you pay to your suppliers against VAT you collect from your customers. Sales and use taxes are non-offsetting.

If your state allows you to keep a portion of the sales tax collected, you need to do two things:

  • Remit the reduced amount to your tax authority. This is recorded as a payment posted against the tax liability account.
  • Make a journal entry to transfer the credit remaining in the tax liability account to a suitable income account (probably one you set up for the purpose). The journal entry would debit the tax liability account and credit the income account. Presumably, your periodic sales tax return includes the calculation of the correct amounts. This journal entry will result in you having no liability showing as money owed to the tax authority. (That assumes you haven’t had any other transactions between the end of the filing period and remittance of the collected sales tax due.)
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No that was not a misstatement i clearly have not got the idea of how it works. What i mean by saying that is i am use to the drop down being a place where money comes in not going out with out yet another drop down box such as the journal entry has. So yeah i have not got that strait in my head yet. So me making a payment normally means it goes under expenses where the sales tax would not go there. Now my biggest problem was when someone had tried to help make it work that was use to quickbooks from the 90s we started with the tax collected went into income with everything else sold where i hand calculated every single items tax before entering a amount and then deducted in expenses thus never using tax codes or bank accounts. Basically if something cost $100 i would add 5.5% to it for a total of $105.5 for that item and that is what invoice would show. There was no separate tax line. Now i am sitting here trying to figure out how to do it the right way lol What a mess right? The mess gets worse trust me.

So it sounds like VAT in other countries you don’t buy stuff tax free like we do here then collect sales tax when we sell it. See that is why it makes no sense to me. I like the program but it is hard for me to understand it and how it relates to my country. Even just how instructions are worded seem odd to me. Such as you use the word “remit” while i would use the word “pay”. Or you use the word “tax authority” where i would use the words “state sales tax”.

I was wondering if the journal entry was the right way to do that but i was not sure i honestly have not got my head around this. That is why i started with someone else figuring out the accounting part for me so i could do the labor part of the work. I had no idea the person that was going to help didn’t know how to do it or that person would just stop doing it one day before i had fully learned it from him. But I guess I can’t always trust my family.

My sales tax works like this. They send a sales and use tax form to me every 3 months and i fill it out and send it in along with a check to pay what i owe. This part was easy to figure out as i could just go to a accountant which is what i did. But i can’t really take manager to a accountant and ask him to show me how it works. Everyone uses quickbooks around here. The state never sees my accounting software at all. I guess i have no clue how it is done in other countries if they have to see it or not.

Again thank you for your help! I am sure to be back with more questions and who knows translations? lol I really have a hard time understanding people from another country. Between using linux and manager i am learning every time i need help!

So in Manager when you make

  • a purchase apply a tax free tax code (or no tax code depending on your tax reporting requirements).
  • a sale apply a 5.5% sales tax code

By the way, what tax jurisdiction is this for? Knowing this may help others on the forum to provide more specific guidance

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Forget whatever you may be used to from other programs or systems. Read the Manager Guides, which are heavily illustrated.

Again, read the Guides. A payment in Manager requires that you select the cash or bank account from which you are paying. Then, for each line, you select the account where the payment is posted. As part of that line, you have the chance to select a tax code. But for sales taxes, there is no code to select on purchases. Just include the tax amount in the unit pricing. You would only select a tax code on a purchase payment under an offsetting VAT system.

Run, do not walk, away from anything having to do with Quickbooks. The programs are not remotely similar. Each has features the other does not.

Define a tax code for your 5.5% rate. Follow the Guide I already linked on tax codes. Apply it when you sell goods or services subject to that tax rate. The program will calculate the tax amount and post it to your tax liability account. When you pay the government, post that payment to the tax liability account, reducing the amount it says you owe for tax liability.

Yes and no. Depending on your state’s laws, you probably pay sales tax on goods you use within your business, such as tools. But you do not pay it on wholesale purchases. That is because the end user pays all the tax.

Manager is good for any country. A huge number of its users are in yours.

They basically mean the same thing. But in accounting, pay implies you are paying for something with your own money. Remit implies you are forwarding money to the government that you collected on its behalf. In other words, it was never your money; you collected it for the government and were holding it until it was time to file your tax return.

These are two very different things. Tax authority refers to the agency that collects the tax, such as a Department of Revenue or the Internal Revenue Service. State sales tax is the tax itself.

In Manager, you never use journal entries for transactions involving the movement of money into or out of the business. You use receipts or payments.

No translations are necessary. Manager is written in English (not the computer code, but all the labels, etc.). It is translated from there to other languages. The Guides are in English. The Forum is in English.

Where are you from? Are you from a different place than your forum account is registered? Is English not your primary language? If not, you can use computer translation software to help you understand others’ posts and compose logical posts yourself.

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Patch It is Nebraska out in the middle of no where so no city tax and no county tax only state of 5.5% is all i have to deal with. I also deal with some exempt portions and many customers are exempt completely provided i get a form 13 from them.

Tut WOW you are a wealth of knowledge! You answered probably 100 questions i didn’t know i had lol. Thank you!

I have read the guides over and over for more then 2 years. I just have a hard time understanding the meaning of things. It is not a way i understand things i guess. It is like that with repair manuals and things like that to. Some are done where it is super easy for me to understand and others are not. I have a long list of test business i use to see it for my self. Also i am glad i never knew anything about quickbooks. I tried to learn GNU cash for a very short bit but that was such a hard one for me to understand and how i ended up with manager in the first place. Manager i could understand slightly at least. My lack of spelling, reading and English skills don’t help. That has been a struggle my hole life. But i can understand mechanical machines very well. Many times in my life i will meet a person such as you very good with other things but if i drive your pickup, your tractor, your ATV i can usually give you a list of the problems it has you never knew was there haha Everyone has something they are good at and something they are bad at.

Far as buying things tax free i can buy everything tax free up front however if it is say a tool for example i do have to pay that tax directly with the sales tax. There is a separate line for me to account for taxes not paid on things i used in the shop such as tools. I try to never do that and pay the tax when i buy it. Way easier that way for me. I do have 2 suppliers that do not let me pay tax on anything and they sell parts and tools so i have had to do that on a few things.

Translate is the wrong word to use. It was sort of a joke to use the word translate. Yes i grew up with all English but we use different words that mean basically the same thing and we use different slang. We also use the wrong word for the wrong meaning sometimes but everyone here locally does it so it becomes habit. Most the time around here the “tax authority” is called either the “tax man” “uncle Sam” “state sales tax” or “government” depending on the conversation and or to show the hatred for it.

Despite your statement you did not read the section on Custom Tax Codes at the link provided by @Tut at Create and use tax codes | Manager

For Nebraska the information for form 10 is in an example at https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/education/Form_10%20filing_demo-single_location.pdf

So for Sales Tax you need to create a Custom Tax Code in Manager for example:

Go to the Settings tab, then Tax Codes, and click New Tax Code and fill the form:

Name: Sales Tax
Label: Sales Tax or ST or whatever is convenient as not prescribed by the authorities but guess that Sales Tax is easiest on the forms and screens.
Tax rate: Custom % (prompted by Manager keep as is)
Type: Single rate (prompted by Manager keep as is)
Rate: 5.5%

Leave the rest as is.

Then follow the guides on how to use this code (read below Custom Tax Codes at Create and use tax codes | Manager namely Applying tax codes to line items.

As mentioned by @Tut

In other words create a Payment and select the Bank Account you pay The Nebraska Tax Authorities from and select the Tax Liability Account where the amount to pay must be cleared from.

I do not see where the guides nor the help provided so far in this forum is giving you trouble. Also there should not be a problem to ask a tax accountant on how best to set things up in Manager as there are far more accounting software packages used in Nebraska than only Quickbooks and all can deal with your requirements. I suspect that your problem relates more to the need to no longer do things manually but electronically and indeed for any accounting package this involves a learning curve and where in doubt the need to consult a tax accountant familiar with tax obligations and submission in your state.

@eko I am not having any more trouble at the moment Tut and joe91 had already given me the answers needed yesterday and it is all already done yesterday. The rest here is mostly chit chat that has actually been very helpful as well. So i am not sure where you got the idea i never read anything or am still having any issues for the moment? In fact your instructions for how to setup the tax code it self i had already done long before joining this forum. Tut in his reply’s had confirmed i had done it right along with another reading of the instructions after Tut had got it strait in my head.

My original question was:
1 What to do with taxes already paid to the state? Answered by joe91 and Tut

My 2nd question was"
2 How do i get the portion of the taxes collected paid to myself for collecting it? Answered by Tut.

The state of nebraska covers thousands of square miles i am not driving all over the state just to find 1 guy that understands manager. I will stick with a local one. Where i am within about 75 miles there is only a couple hand fulls of towns and them few towns most do not have a accountant at all. This is not the big city here. Most the state is farm ground. Also if you read any of my reply’s you would see where i stated i was just at a accountant to learn the form 10 which i never used the online thing before. It was mailed to me and was done on paper before. However while at the accountants office he walked me threw doing it on paper and online.