VAT on cash sales in restaurant

[John Edwards]

On Fri, Feb 5, 2010 at 1:11 PM, Nuara Valsecchi
<nuara.valsecchi at gmail.com>wrote:

> probably an other silly question but thank in advance for your help...
>
> Trying to understand how to calculate the VAT (IVA, BTW...whatever the name
> in the different countries) for a small business like a restaurant.
> If I write an invoice to a customer the tax (in liability) is calculated
> automatically and the amount is written in the correct account when posted.
> My wonder though is for the payment received from the customers in the
> restaurant paying cash. There are 2 different taxes applied (6 and 19%
> depending on food or alcohol) but I am not sure where and how I am supposed
> to account for the payments.
> Should I write them as Income (i.e. sales)? if yes, is there a way to have
> the tax calculated directly or would I have to split the transaction and
> enter them manually???
>

Sales tax (be it VAT or a consumption tax) that you collect and have to
forward to the government is a liability.

Given a 19% VAT, if you collect $119, $100 goes into the appropriate Revenue
account, and $19 goes into Liability:VAT owing.

If you're looking for how to calculate it when knowing only the total
payable, the usual formula would be VAT = Total / (100+VAT rate) * 100. So,
for the 19% scenario the VAT would be the Total / 119 * 100.

You would have to perform that calculation for each separate rate you have.
(Have I mentioned how much better visible sales taxes are than hidden ones?)

John

-- 
John Edwards
"You can insure against the weather, but you can't insure against
incompetence, can you?" - Phil Tufnell