[GNC] How to accurately record Use Tax

[Christopher Lam]

For your use case you could use AP accounts and bills.  Let's assume your
use tax is 15% to be cleared in December 2020.

I'd think, during purchase
24/02/2020 Buy something, will also need to pay use tax
Expense:MI Use Tax +$100
Asset:Bank -$100

and post a bill, posting date is 01/12/2020
31/12/2020 Use Tax due
Expense:Use Tax $15
A/Payable -$15

and in December 2020, clear the AP bill as usual.

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You could also do it manually without using AP/AR accounts
31/12/2020 Use Tax due
Expense:Use Tax $15
Liability:Future Use Tax -$15

and in December 2020, clear the Liability account.

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> Other payable accounts you create should be of type ‘liability’ and you
can manually enter stuff there all you want. (there can be only one account
of either *type* AP or AR)

You can actually have as many AP/AR accounts as you like, in different
currencies too.

On Sun, 23 Feb 2020 at 01:47, Brandon Captain <caibbor at gmail.com> wrote:

> I make purchases for which I owe state Use Tax on. It's important for me to
> record the Use Tax liability at the time it becomes a liability, but only
> record it as an expense at the time that I pay it.
>
> I have several accounts for this, but the important ones are:
>
> * "Future Expense(A/P):MI Use Tax", a top-level Accounts Payable account.
> * "Expenses:MI Use Tax"
> * "Liabilities:MI Use Tax"
>
> When I make a purchase that I owe use tax on, I make a split transaction:
> * decrease an asset account by the amount I paid, and increase the expense
> account by the amount I paid (not including the unpaid use tax).
> * increase the "Liabilities:MI Use Tax" and increase "Future
> Expense(A/P):MI Use Tax"
>
> In the next year when I remit the Use Tax to my state, I create another
> split transaction for the amount I pay in use tax:
> * decrease whatever asset account, and decrease "Liabilities:MI Use Tax"
> * decrease "Future Expense(A/P):MI Use Tax", and increase "Expenses:MI Use
> Tax".
>
> This method allows me to keep the Use Tax that I pay recorded in the proper
> year - I can't record it as an expense at the time I buy the item, because
> I haven't paid that portion of it yet, and I don't want to have to remember
> that come next tax season.
>
> I am not using the default "Liabilities:Accounts Payable" account because
> it would negate "Liabilities:MI Use Tax", and would always look like I have
> a zero tax liability which would be incorrect.
>
> So this setup seems to work, but I'm unsure about the GnuCash documentation
> which says: "Transactions involving an Accounts Payable account should not
> be added, changed or deleted in any way other than by using post/unpost
> bill/invoice/voucher or process payment"
>
> I don't use the payment system (yet), but why is it such a problem to
> manually enter A/P transactions?
>
> Is it really that important that I use the bill/payment system for these
> transactions? And once I do so, can I safely split them afterward?
>
> Thank you
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