Question

New to QBO: How to record my pre-QBO GST payable and categorize the associated GST payment?

Forum|Forum|5 years ago
March 18, 2021
2 replies
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New QBO user starting day 1 of current fiscal year (July 1).

In September, I paid GST assessed by CRA for previous fiscal year (when I wasn't using QBO) from my bank account.

How do I categorize the money out (to CRA) transaction in my bank account?

Do I need to somehow record the 'opening GST balance' in my QBO tax account and categorize the money out as a funds transfer to that account?

I want to make sure I do it right such that my QBO GST Payable account remains accurate and will balance next year after I file my return/pay GST assessed.

QuickBooks Online

A

Alex M

Hello XianNewman,It's awesome that you've chosen QuickBooks Online to help you save time managing your books. Making sure your initial setup is complete is a vital step to getting your fiscal year off to a good start. I can point you in the right direction.

The best way to enter an opening balance to an account in QuickBooks Online is through Journal Entry. You can create one of these by navigating to the +New Icon in the top left of your screen and selecting Journal Entry. You need to select the accounts you want to affect, and make sure that the credits and debits match in order to save. Here's a great article to learn more in depth info about how to enter an opening balance

Since this has to do with your taxes, I'd recommend speaking to your accountant for assistance with creating this journal entry. Their accounting knowledge as well as their understanding of best business practices will be able to guide you in choosing which accounts you should affect when creating this transaction. If you want to add your accountant to your account in order for them to see your books, you can accomplish this by navigating to the My Accountant tab and entering their contact details. If you wish to find an accountant with QuickBooks experience near you, select the Find a pro to help at the bottom of the My Accountant page.

I hope that these steps help you get started with entering your tax opening balance. If you have any questions feel free to let me know here. I've got your back!

X

XianNewmanAuthor

My accountant did my tax return and provided me the amount owing.

I made the payment - I just need to know how to correctly categorize it in QBO (which downloaded the payment from my bank account) against a GST payable (which doesn't exist in QBO since I didn't use QBO last year).

QBO doesn't appear to allow journal entries on the GST Payable account - at least not easily. QBO support suggested maybe creating a second GST Payable sub-account and setting an opening balance or making a journal entry to that (?!?) but QBO still didn't provide that option, and it felt wrong to me anyways.

I'd categorize the GST payment as an expense (but is it really an expense?).

Sorry, new to this, and part of the reason I'm making the switch is to get my books right from the start.

Rebecca R

Thanks for those additional details @XianNewman. I love that you want to ensure that you're starting this fresh subscription with correct bookkeeping processes so I want to advise you on the best course of action to take in this scenario.

Since you're starting QuickBooks from the beginning of your current fiscal year, and the payment that's showing up in the bank feed is from your previous fiscal year, it isn't necessary to record it in QuickBooks unless your accountant advises you to do so. If you're looking to record all transactions from the previous fiscal year, you can do so using the appropriate sales tax codes so that your sales tax filing will populate the correct amounts. Then you can file and record your payment for that previous fiscal year. This is the correct way to handle sales tax in QBO.

Since you're only looking to start recording from this fiscal year onwards, the best course of action would likely be to Exclude the payment transaction from the bank feed. To exclude it, all you need to do is select the checkmark and hit Exclude. This sends the transaction from the For review tab of the bank feed, to the Excluded tab. If you decide you'd like to record it at a later date, you can navigate to that tab and hit Undo in the Action column to send it back to the For review tab to be categorized.

If your accountant wants you to record this payment in your books even though it's from a previous fiscal year, you'll have to ask their advice on how they'd like you to record it. The GST Payable account is one generated by QuickBooks that's used in connection with the Sales Tax module. You may want to determine if there's another account that you can use as per your accountant's advice. Your accountant can join you in QBO if you navigate to the My Accountant tab and enter their email address into the invite field. The Find a pro to help button on the same page will take you to our database of QuickBooks-certified accountants if you'd like another resource to consult with.

I know you'll have this sorted out in no time, and I'd like to leave you with some articles on recording sales tax in QBO so that when it comes time to record a payment for your current fiscal year, you have all the information you need.

Take care and enjoy your weekend!

Olao

Hello.

I was having the same issue as yourself.

QuickBooks seem not to allow direct selection of the GST Payable from the banking review which I think they need to improve this system.

QuickBooks also have an account called "GST/HST suspense account" I noticed I could select this account from the Banking review.

This is what I did, I noted the amount that I paid and then, recorded under the suspense account to clear the banking.

Then I created a journal entry: Debit to "GST/HST payable" and Credit to "GST/HST suspense". The journal entry was able to save and the amount is reflected in the right account "GST/HST payable"

I hope this helps you.

Ola.

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