Quicken & Other Budget/Accounting Software/Tax

Advertisement


Question
QUESTION: Hi,

Withholding Tax is under which a/c in the chart of account? Is it under Cost of Sales.

ANSWER: HI FA

I am going to assume that Withholding tax is a deduction
from employees paychecks.

In the USA we remit the withholding tax to the government.

When ntering payrol:
The gross salary is posted to the Salary expense account
Taxes withheld are posted to a Payroll Tax liability account
Deductions that will not be paid out in the exact amount
 (example health insurance) can be posted to the expense
  account where the expense will be paid
And Net pay will be posted to the checking account .

When you pay the payroll liabilities you will post that payment
to the payroll liability account as well reducing the liability
at some point back to zero.

Linda Saltz, CPA
Advanced Certified QuickBooks Advisor
https://www.qbalance.com
We sell and support  QuickBooks Enterprise

---------- FOLLOW-UP ----------

QUESTION: Not from employer pay. The withholding tax i meant is from service performed from specialist from other countries

Answer
I recommend that you set up a separate liability account to track the
deduction from Speciaists payments.  Post the remittance to the government
of this deduction to this same liability account.

Set up an account called "Subcontractor withholding payable"
as an other current liability

An example might be that you pay Mr Smith $500 for services rendered
but need to deduct $50 for the withholding tax

When posting the bill in your accounts payable software
you would :

Post $500 to Subcontractor expsense
Post  -50  to the Subcontractor withholding payable account

So the total bill will be $450

Linda Saltz, CPA
Advanced Certified QuickBooks Advisor
https://www.qbalance.com
We sell and support  QuickBooks Enterprise

Quicken & Other Budget/Accounting Software

All Answers


Answers by Expert:


Ask Experts

Volunteer


Linda Saltz, CPA, QBalance.com

Expertise

QuickBooks best practices, troubleshooting, accounting, tax We have over 70 pages of website content about QuickBooks tips, running a business, tax and business startup at http://www.qbalance.com

Experience

Accountant and CPA over 20 years. Specializing in accounting software for over 12 years, Certified QuickBooks Pro Advisor, QuickBooks seminar instructor since 1997.
Producer of www.QBalance.com over 100 pages devoted to QuickBooks help and support and training for small business owners in tax and accounting issues.

©2016 About.com. All rights reserved.