Understanding taxes and the income statement

[doncram]

Got the tax table to work.  Per
https://www.gnucash.org/docs/v2.6/C/gnucash-help/busnss-ar-setup1.html, the
way to set up a tax table is under Business select Sales Tax Table, select
New.  Call this Consulting Sales Tax, set the default type as "Percent",
set the percentage to 7.  Then go back and edit the invoice to show 20.00
for Consulting revenue with Taxable set and with Tax included set to NO,
and set Tax table = Consulting Sales Tax.  Then see "Print invoice" to see
the invoice looks good, which it does.

I still had to find the invoice and "Post" it.  Then I had to find "Process
Payment" for the customer, and select the posted invoice, and enter $20.00
being paid, then enter that.  This did properly record $18.69 of Consulting
revenue, which I can see in Reports / Income & expense.  And in balance
sheet I confirm it records $20 cash and also records $1.31 of Sales Tax on
Consulting revenues.

So what Pete wants can be done.  Hopefully this helps. :)

On Sun, May 21, 2017 at 3:26 PM, doncram <doncram at gmail.com> wrote:

> I try to do what Pete needs, but get stuck where I need to create a Tax
> table.
>
> In my test company, I created an Income account for Consulting revenues
> and a Liability account for Sales Tax Payable.  If I received the $20 in
> cash I would want to enter a transaction that would implement the following
> journal entry
>
> Cash                                $20
> Consulting revenues                     18.69
> Sales tax payable                             1.31
>
> When I create a new invoice for a customer that i created, at first I
> didn't see how to make any split transaction or otherwise include the sales
> tax.  However, I find that a kludgy way that works to add a line for 18.69
> amount for Consulting revenues, i.e. 1 unit at cost/unit of $18.69, and add
> another line for a unit of Sales Tax Payable at 1.31.  Printing an invoice,
> I see that looks unprofessional, as the invoice form allows for taxes to be
> included on a separate line below all components of work that the client is
> being billed for, but it does present a bill for $20 in total.
>
> It seems like what is needed is to have just one line in the invoice, with
> 18.69 amount and "Tax included" set to NO, or with 20.00 and with "Tax
> included" set to YES.  Then a linked "Tax table", where 7% rate is set
> somehow, is supposed to do its magic.  However I don't see how to create a
> Tax table;  it does not seem to be included in "Help".
>
> So can anyone advise more specifically how to set up the invoice that Pete
> needs?
>
> Don
>
> On Sun, May 21, 2017 at 5:17 AM, Maf. King <maf at chilwell.net> wrote:
>
>> On Sunday, 21 May 2017 00:33:49 BST P M wrote:
>> > Very basic problem here.  I made an invoice for a service that I did.  I
>> > received $20.  Where I live I have to charge 7% tax.  So the revenue is
>> > actually $18.69 and the tax is 1.31.    My invoice has a subtotal of
>> $18.69
>> > and a tax of 1.31.  I post it and get it paid and for some reason my tax
>> > expense is a -1.31.  In other words my net income is boosted by $1.31 as
>> > opposed to decreased to $1.31.  Why is this?  Is this because I haven't
>> > actually paid the sales tax yet and I close it out later?
>> >
>>
>> Hi,
>>
>> If your sales tax works anything like VAT does here in the UK, the tax
>> you've
>> collected isn't an expense to you...  you should record the tax portion
>> as a
>> liability - it isn't your money, it belongs to the government, you are
>> just
>> "looking after it" for them.
>>
>> HTH,
>> Maf.
>>
>>
>> _______________________________________________
>> gnucash-user mailing list
>> gnucash-user at gnucash.org
>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>> -----
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
>>
>
>