Quicken & Other Budget/Accounting Software/Split tax paid on purchases
We received invoice for payment as below :
Editorial Fee $ 5,000
6 % Tax $ 300
Total Bill amount $5,300
Should i enter the total bill above as $5,300 or make a remark when entering the $5,000 amount as taxable of 6%?
Which is the right way to enter this invoice?
Here is the USA we treat tax on purchases as part of the acquistion cost and
we do NOT classify the sales tax to another account. So in the above example
we would post $5300 to editorial fee expense.
You would need to research your local rules.
For example, In Europe they have a Value added Tax (VAT)
on certain purchases which can be netted against sales tax collected.
Therefore in the case of VAT tax it would be important to track the tax paid separately
(posting to the sales tax liability account- or subaccount).
If your location has a similar type of taxation, then you would split the
Linda Saltz, CPA
Advanced Certified QuickBooks Advisor