Sales Tax with GnuCash

Pablo Francesca rshgeneral at yahoo.com
Thu Dec 31 21:37:22 EST 2009


I would agree a Sales Tax account should be a liability account if Tax Tables are used.  I can't see how Sales Tax (from a business perspective) can be an expense.  Whether or not your suggestion is because of an oversight, or because it merely inhibits flexibility I cannot say.  Many times computer programmers opt not to impose too many restrictions on users to allow for generous flexibility (a good idea i think).  So it does seem that request is a valid one.

Again, using the accounting equation, it might shed more light as to why it's not an expense.If a customer pays you you 11 dollars for a 10 dollar item with 10 percent sales tax, you would debit an asset account (usually checking) 11 and the tax table would credit the sales tax liability account for 1 dollar.  This
 transaction would reflect that allow you are indeed now in possession of 11
 dollars, 1 of those dollars is not yours. When you pay the sales tax you would then debit the Sales tax account and credit the asset account.  No expense account is involved.

However, you state " I am even more surprised to see this setup is the
default setup if user run the setup droid and select starting from
Common Accounts, which is I guess what most people does before they get
acquainted with GnuCash."  

I don't see Sales Tax anywhere in Common Accounts.  There are Tax Accounts (and they are correctly placed as Expense Accounts).  There is an Other Tax category (Again, I think this is for flexibility).

Under your description I see Tax is reasonable to be of Expense type,
however in such case it cannot be credited. Thus it makes sense that IF
Tax Table is used, user should
 not choose Sales Tax as Tax Account
unless it is of Liability type. Do you agree with this? If you agree, it
makes it a valid request for feature to prevent user choose an Expense
type account as Tax Account, unless Tax Table offer to debit (instead of
credit) tax if user choose an Expense account for Tax Account.




      


More information about the gnucash-user mailing list