[GNC] Sales Taxes...

[Greg Feneis]

All of these examples appear to be supplies for the business to use (vs
items purchased for selling). Why would the cost of the taxes paid need to
be account for separately from the cost of the items?

Kind regards, Greg Feneis
(Pixel 3)


On Sat, Dec 26, 2020, 16:52 Eric H. Bowen via gnucash-user <
gnucash-user at gnucash.org> wrote:

> Okay. With year-end coming up I'm not looking to make major changes in
> the past, but I'd like to account for everything properly in the future.
>
> Say I purchase $100 in printing supplies (paper, ink, etc.) from a local
> vendor. The IRS wants me to account for taxes in the value of items
> purchased. So I add an entry for $108.25 (8.25% local tax), and the full
> value goes into my "Expenses:Business Expenses:Office Supplies" account.
> Fine.
>
> Now, suppose I purchase that $100 in supplies from an out-of-state
> vendor who falls under the threshold for reporting sales taxes to Texas
> (rhyming couplet there?) and so does not charge me sales tax on the
> purchase. The law says that I have to pay a sales/use tax on the
> purchase anyhow. Fine, I have a liability account set up for "Sales
> Taxes Payable" which I normally use for the sales I make to customers;
> once a quarter I total this up and send a check in to the comptroller.
> No problem at all to do so with my online purchase, but the $8.25 which
> I pay at the end of the quarter doesn't get added to my Office Supplies
> purchase, as it should.
>
> Finally, suppose I purchase the supplies from a local vendor, who
> charges tax, but who grants me a "Net 30" for payment and so it goes
> into my Accounts Payable as a bill. If I use the "Sales Tax Payable"
> account/tax table for the purchase, my payment for the purchase goes in
> as a payment on the liability, which is wrong. I can use a separate
> sales tax table tied to a different account for purchases, in which case
> it will be recorded as "Expenses:Business Expenses:Business Taxes:Sales
> Tax Paid", but ideally the $8.25 should have been added to the value of
> the purchase in "Office Supplies."
>
> Is there a quick and elegant solution to this issue which I'm
> overlooking, but that I could implement for next year?
>
> --
>
> --------Eric H. Bowen
> eric at ehbowen.net <mailto:eric at ehbowen.net>
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