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S
Skellytonne
January 5, 2021
Question

Segregating Input Tax and Output Tax in Chart of Accounts

  • January 5, 2021
  • 1 reply
  • 0 views

Hello.

 

One of my companies has set up the accounts "Input Tax" and "Output Tax" in the chart of accounts so that it is easier to monitor the inflow and outflow of taxes. This was the set up even before my active participation of the company so I wasn't sure how it was made.

 

 

Meanwhile, my other company only has "Tax" in which the two items (i.e.: Input and Output) are mixed together. You can see it here when the invoices and bills are mixed togethr. I wanted to segregate them similar to the previous company but upon looking around at QBO, and my employees didn't how how the set up of the previous company was made.

 

 

Would appreciate as to how I can segregate them in the chart of accounts. Thanks!

    1 reply

    C
    Catherine_B
    January 5, 2021

    Hello there, Skellytonne.

     

    Let's also ensure that the accounts affected are posted to either Input Tax and Output Tax account. You can use a different report that will segregate the Bills and Invoices by accounts. Just go to the Reports menu. Then, search and select the Transactions List by Account. Use this article for more details on how to customize your reports. 

     

    If you haven't created the accounts yet, you can create sub-accounts for the tax and then manually edit and update each transaction. Here's how to create a sub-account:

     

    1. Go to the Accounting menu and select Chart of Accounts.
    2. At the upper-right, click New.
    3. Select the Account and Detail Type correctly and enter a name something like Input Tax. 
    4. Check the Is a sub-account box and select the parent account (VAT Payable). 
    5. Click Save and Close.

    Do the same thing for the Output Tax sub-account. After setting up the accounts, you can edit the transaction by pulling up the Transaction List report and select each Bill and update the account affected while the option to edit them by batch is unavailable. 

     

    Another way to keep track of your transactions is by using the Location and Class tracking feature. 

     

    Let me know if you have other questions. Take care and have a good one!

    S
    SkellytonneAuthor
    January 5, 2021

    Hello,

     

    As much as possible, I do not want to create a separate transaction report for both input and output tax since I want to be able to access them immediately via my Balance Sheet chart of accounts (your second proposed solution). However, I cannot seem to find a way to change the chart of accounts in the Invoice and Bill template. (Please see pictures)

     

    Kristine Mae
    Kristine Mae
    January 5, 2021

    Let me share how it works, Skellytonne.

     

    It looks like you're using a product or service in the transactions. You're unable to change the account from there. You'll have to open the item and make some changes. Here's how:

    1. Click the Gear icon.
    2. Go to Products and services.
    3. Select an item, then click Edit.
    4. You can change the Income Account and Expense account.
    5. Click Save and close when done.

    However, the transactions will show in the Profit and Loss report since you'll be using income or expense accounts. If you want to use accounts that will show in the Balance Sheet report, you'll have to use an asset, liability, or equity account. You can add it directly to the bill. You'll have to add a line item under Category details. 

     

    Concerning the report, you can follow the suggestion provided by my colleague. You can customize it so you can focus on the details that matter to you. Then, memorize it so you'll no longer go over to the same customization process. 

     

    If additional questions pop-up, you can always leave a comment below. We'll reply as soon as we can.

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