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E
E_C
July 6, 2024
Question

Profit and Loss Statement

  • July 6, 2024
  • 1 reply
  • 0 views

Hi,

 

I am a sole trader that is not vat registered

 

I run the report for my profit loss statement but when i checked each line item in the expenses in the statement, it does not take into account the vat that i am paying for all purchases i did. This lowers the Total expenses and makes the net income go higher than it should be. Is there anywhere in quickbooks setting that i need to do to sort this out?

1 reply

F
FateCandylaneT
July 6, 2024

Thanks for joining this forum, E_C. I've got the necessary input to help resolve taxable amounts assigned to the purchases you created in your account.

 

Since you aren't a VAT-registered business, transactions recorded in your file must not have associated VAT or taxable amounts so these won't reflect in your Profile and Loss statements and tax returns.

 

In order to sort this out, it's best to review your expense entries created if there are any corresponding VAT amounts assigned to each of your items. With that, you'll need to select the No VAT option so you won't be liable for these taxes.  

 

To do that, you can go to Expenditures from the left menu bar and locate the expenses you created, then click Edit. From the Amounts are dropdown, select No VAT so these entries are exclusive of tax.

 

Once done, review all transactions and run your financial statements again to verify all amounts are accurate.

 

You may also run through the details from this article to learn more about VAT on your purchases: Set up and record purchase taxes in QuickBooks Online.

 

I'll keep this thread available so you can always reply in the comments below for any additional queries when managing financial reports in your file. Stay safe, and have a good one!

E
E_CAuthor
July 7, 2024

Hi Fate,

 

Thank you for your reply. I already did that but the value in my profit loss report still just shows the vat ex amount. Please see attached images for example

 

As you can see in the attached file.

 

Profit loss report is showing £9,849.46 for the cost of sales.

 

In the transaction report, you can see that the £9,846.46 is just the vatex amount. But when i am buying my goods, I pay the vat as well, which totals to £1,963.57. So as per my understanding this £1,953.57 should be taken into consideration in the Profit loss report as I paid this out. I am not Vat registered so I cannot claim this back.

 

I have attached a screenshot as well on how I encode an expense, just in case i am doing this wrong.

 

Any advise is appreciated. Thank you 🙂

L
LollyNino_C
July 7, 2024

Thanks for coming back to the thread, @E_C. I'll provide additional information about your VAT setup in QuickBooks Online (QBO).

 

If your business is not VAT-registered or is exempt from VAT registration, you can create a sales transaction that does not include VAT, you can select NO VAT as the option so that it does not appear on your VAT return. You can edit the expense transaction created and ensure that it is set to No VAT. Let me walk you through the steps.

 

  1. Go to Expenditures or Expenses, then click the New Transaction dropdown.
  2. Choose Expense.
  3. Under Amounts are, choose No VAT.
  4. Enter the information needed.
  5. Click Save and Close.

 

I've included the short clip below for reference.

 

 

In addition, here’s an article you can refer to when setting up and editing VAT settings, codes, and rates in QBO.

 

If you want the NO VAT to auto-apply the NO VAT for specific items on the invoice, you can set up a default VAT to NO VAT rate in the chart of accounts or when setting up a product or service. This will make the NO VAT automatically apply as default.

 

Here's how:

 

  1. Go to the Transactions tab.
  2. Click the Chart of accounts.
  3. Tick the box to select all accounts.
  4. Select the Batch actions dropdown arrow and click Set default VAT code.
  5. In the Choose Rate dropdown, choose No VAT.
  6. Once done, hit Apply.

 

I've attached the brief clip below for your reference.

 

 

Check out this article to learn more about setting up VAT in QuickBooks Online: Turn off VAT in QuickBooks Online.

 

You can review this article for more information: VAT codes in QuickBooks Online: A complete guide.

 

On the other hand, whenever you need to create exceptions, you can review this material for guidance: VAT exceptions and reports in QuickBooks Online.

 

Feel free to visit the Community forum if you need further assistance with the VAT codes or other related concerns in QuickBooks Online. We can always lend a hand.

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