How to best keep track of tax liabilities of a sole proprietorship

[davelist at mac.com]

> On Jan 9, 2018, at 8:04 PM, Chris Smith <chris at cgsmith.net> wrote:
> 
> I am using GnuCash for my freelance business. My dad always taught me to
> set 30% of a check aside for the government's share.
> 
> How would you enter this to keep track of the tax liability? I am thinking
> I'd have to enter it against my *Income:Sales* account as a transfer to
> *Liabilities:Tax*
> 
> I figure at the end of the year *Asset:Checking Account* can transfer to
> satisfy the true Tax liability.
> 
> One thing to note, I *don't* want the liability to effect reports on sales
> reports. :/
> 
> Am I just overthinking this?
> 
> --
> Chris
> <chris at cgsmith.net>
> 

What I do so I have a basic idea of what my income/expenses are is to make an expense for taxes and a liability for taxes and do a transaction between those two each month. And then when I pay the taxes, the transaction is between the checking account and the liability tax account.

So it won't affect income, but it will affect your net income (income - expenses) as it should.

Others may chime in with more definitive answers as IANAA.

HTH,
Dave