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Finance-passionate
September 13, 2023
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How to record and pay Tax Deducted at Source ( withholding tax on supplier's behalf )?

  • September 13, 2023
  • 2 replies
  • 0 views

Hi Everyone,

We are required to withhold a proportion of the balance due on supplier's Bill and pay that amount directly to the tax authorities. Please guide us on how to record this on QuickBooks.

Best answer by SirielJeaB

Thank you for coming back to the Community, Finance-passionate. We are happy to assist you with recording withholding taxes on behalf of suppliers in QuickBooks Desktop.

 

You can create a liability account to keep track of the balance due from the supplier's bill and the tax amount deducted on their behalf. Please follow the steps below:

 

  1. Click the Company menu, then choose Chart of Accounts.
  2. In the Account dropdown, press New.
  3. Select Other Current Liability in the Other Account Types dropdown button.
  4. Tap Continue.
  5. In the Name field, enter "Tax on supplier's behalf."
  6. Hit Save and close.

 

You also need to create an Expense transaction to pay the portion of the tax on the supplier's behalf to the tax authority. Here's how:

 

  1. Select the Vendor menu.
  2. Choose the Enter Bills option. A window will appear.
  3. Go to the Expense tab.
  4. Pick the Tax on supplier's behalf account.
  5. Enter a negative amount.
  6. Go to the Items tab to record the item.
  7. Note that the amount should be higher than the Expense and should not be negative.

 

I also suggest to get in touch with your accountant for guidance on accurate record-keeping.

 

In addition, you have the option to generate the Transactional Detail by Account report and customize it to a particular account, such as Tax on Supplier's behalf, to keep track of the withholding tax within your program. Here are some informative articles that can assist you in managing reports:

 

 

Please don't hesitate to reach out to us for any other QuickBooks-related concerns. You can simply click on the Reply button below or create a new post in the Community. We care about your needs, and we are always happy to help!

2 replies

S
SirielJeaBAnswer
September 13, 2023

Thank you for coming back to the Community, Finance-passionate. We are happy to assist you with recording withholding taxes on behalf of suppliers in QuickBooks Desktop.

 

You can create a liability account to keep track of the balance due from the supplier's bill and the tax amount deducted on their behalf. Please follow the steps below:

 

  1. Click the Company menu, then choose Chart of Accounts.
  2. In the Account dropdown, press New.
  3. Select Other Current Liability in the Other Account Types dropdown button.
  4. Tap Continue.
  5. In the Name field, enter "Tax on supplier's behalf."
  6. Hit Save and close.

 

You also need to create an Expense transaction to pay the portion of the tax on the supplier's behalf to the tax authority. Here's how:

 

  1. Select the Vendor menu.
  2. Choose the Enter Bills option. A window will appear.
  3. Go to the Expense tab.
  4. Pick the Tax on supplier's behalf account.
  5. Enter a negative amount.
  6. Go to the Items tab to record the item.
  7. Note that the amount should be higher than the Expense and should not be negative.

 

I also suggest to get in touch with your accountant for guidance on accurate record-keeping.

 

In addition, you have the option to generate the Transactional Detail by Account report and customize it to a particular account, such as Tax on Supplier's behalf, to keep track of the withholding tax within your program. Here are some informative articles that can assist you in managing reports:

 

 

Please don't hesitate to reach out to us for any other QuickBooks-related concerns. You can simply click on the Reply button below or create a new post in the Community. We care about your needs, and we are always happy to help!

S
SLK888
November 28, 2024

Hello thanks for this. That is what we are doing, however we are required to add a tax rule on the TDS line item.

Can we bypass this?

It does not seem right to add a tax rule (even if 0) on a tax item.

R
RhoiceW
November 28, 2024

Thank you for reaching out to the QuickBooks Community. I understand that you're facing challenges in adding a tax rule to the TDS line item, especially when it seems unnecessary.

 

In QuickBooks, each line item in an invoice or transaction generally requires a tax classification to ensure accurate reporting and compliance with tax regulations. However, if your transaction amount is 0 and your government requires you to include a tax, you will need to add a tax rate to the transaction.

 

Here’s how:

 

  1. Go to VAT and select Add Tax.
  2. Select Tax rate, then enter the tax name and description.
  3. Choose the Tax agency, then click Save.

 

For more guidance, I'd suggest reaching out to your accountant for you to be guided and since taxes are crucial in this kind of situation.

 

You can visit this article for more detailed steps on how to add a sales tax category in QuickBooks Online (QBO).

 

Additionally, you may also refer to our article on tax reports to help you analyze your tax obligations and ensure accurate reporting.

 

If you have any more questions or need further assistance regarding sales tax, please feel free to ask. I'm here to support you throughout the process.

C
Cp deli
November 29, 2023

its not deducting taxes on paychecks

Bryan_M
Bryan_M
November 29, 2023

Hi there, @Cp deli.

 

The steps above are applicable for vendor tax only. If you're referring to deducting taxes on your employee paychecks, let's ensure to add a payroll item and add it to your employee's paycheck.

 

Here's how:

 

  1. Go to Lists, then select Payroll Item List.
  2. Right-click the item and select Edit Payroll Item.
  3. Change the info as needed on each window.
  4. Select Finish.

 

For detailed steps, feel free to read this article: Set up, change, or delete employee-paid payroll deductions.

 

If you're done with the steps above and the taxes aren't deducted from paychecks, there are various reasons for this. These are:

 

  • The total annual salary exceeds the salary limit.
  • The gross wages of the employee's last payroll are too low.
  • Your payroll tax table is outdated.

Let's make sure your QuickBooks is in the latest version as well as your tax table. You can also review the employee's tax setup since it affects how QuickBooks calculates it.

 

Once done, please revert your employee's paycheck. This refreshes your payroll information to calculate the taxes on the transaction.

 

Here's how:

 

  1. Open your employee's Payroll Information.
  2. Right-click the name of your employee which is highlighted in yellow.
  3. Select Revert Paycheck

 

Additionally, you can check out these articles for more troubleshooting solutions when payroll taxes are not withholding:

 

 

Feel free to reply to this post if you need a hand with running employees' payroll reports. I'll be here to help.

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