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debbie37
September 26, 2019
Question

What account do i enter income tax payments under

  • September 26, 2019
  • 4 replies
  • 0 views

i have paid provisional tax for my company . how do i set up the correct account in the chart of accounts

    4 replies

    Rajanikanth
    Rajanikanth
    September 26, 2019

    Hi, Debbie

    Create an expense type account called Income Tax from the Chart of accounts.                                                                

    Account Type - Expense,   *Detail Type - Tax Paid, *Name - Income Tax.

    Comment back for further clarifications.


    J
    jan25
    September 26, 2019
    Is this correct as it shouldn't go in the profit and loss as an expense?
    E
    Elene
    October 21, 2019

    Hi all tax payments should go to a current liability account for now.

    Called Tax Payable. 

    When  tax are calculated and a provision is created at the end of the financial year you will create a journal debit tax expense credit tax payable.

    The balance in the liability account is the balance that should be paid to SARS.

    Let me know if you need any further assistance in setting this up.

     

    Enjoy your day!

     

      G
      Gran123
      August 27, 2021

      Thank you for posting! Once I have the total amount and account set up, how do I show payments made?

       

      katherinejoyceO
      katherinejoyceO
      August 27, 2021

      Thanks for following this thread, @Gran123. I'd be happy to share with you the steps to show the income tax payments made in QBO. 

       

      Once I have the total amount and account set up, you can now enter the tax payment in QuickBooks. Here's how: 

       

      1. Go to the Taxes menu, then click the Payments tab. 
      2. Click Record payment.
      3. Choose the appropriate bank account. 
      4. Enter the Payment date, its amount, and Memo. 
      5. Click Save.

       

      Once done, run the VAT Summary and VAT Detail reports to review your tax payments. 

       

      For future reference, check out this link to learn more about filing and paying Tax/GST. 

       

      I'll be here to lend a helping hand again if you need more help. Take care!

      Y
      Yachad
      December 5, 2019

      While I agree with all they said about tax payable for tax that has not been paid yet, when it is paid, federal income tax should go in an "other expense" account. I named the account "federal income tax," then set it up as an "other expense" account. The instructions for "other expense" accounts says that they are for things like federal income tax and lawsuits and other non-deductible expenses. When Quickbooks prints a P&L, it gives a total without those "other expense" accounts and a separate total after.

        T
        TrevorK
        August 17, 2022

        I have issues with my payroll so i decided to create a payroll control account(liability) and an expense a/c that is Salary .Where then I debit my expense a/c and credit my Control A/c that is Income Tax and Net Pay I'm I doing the right thing please help

        E
        Elene
        August 17, 2022

        Hi

         

        So your income statement account should be your nett pay + uif 2% + PAYE (total company contribution) and should reconcile to your EMP501. 

        Your balance sheet account should only be the amount owed to SARS at the end of the period and should clear out if you paid them by the 7th.

         

        Your journal should be

        dt: Salaries (income statement) (For salaries , UIF + SDL + PAYE)

        kt : Payroll clearing

        (This is usually done by your payroll software)

         

        THEN once PAID the payment is taken to the payroll clearing account

        Salaries paid + SARS paid

         

        This will clear the payroll clearing each month.

        Just remember to pull a PAYE statement of account each month and to account for interest and penalties if there where any.

         

        Hope this helps.

        Have a great day

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