[GNC] how to link an expense (a tax) to a invoice being issued
davidcousens49 at gmail.com
davidcousens49 at gmail.com
Thu Oct 21 22:26:18 EDT 2021
Mattia,
When you purchase tax stamps in advance, they become a temporary asset of your
business which you would expense at the time you attach then to an invoice.when
you purchase the stamps you would credit your bank account by the amount of the
purchase and debit an appropriate asset account (e.g.
Asset:Current:TaxStampsPrepaid).
If you don't pass the tax onto the customer it won't appear as a line item in
the invoice and simply becomes an expense on your business. You would at the
same time as you raise the invoice and attach the tax stamp create a transaction
which credits the above asset account and debits an Expense:TaxPaid account.
If you are passing it on to the customerthen create a secondline in the invoice,
Add an appropriate description,set the Income account to
Asset:Current:TaxStampsPrepaid and set the amount of the attached tax stamp.
This will add the value of the tax stamp to the A/R account and credit
Asset:Current:TaxStampsPrepaid
On the other hand when you raise an electronic invoice and payment is deferred
to a future date, then the tax component is a liability on your business which
you would record inan account labelled something like
Liabilities:TaxPayableDeferred.
Again if your business is paying the tax and it is not being passed onto the
customer then in parallel to raising the customer invoice you would create a
separate transaction which credits Liabilities:TaxPayableDeferred and debits an
expense account Expense:TaxPaid and there would be no line item in the invoice
to the customer.
If you are passing the tax onto the customer, then when you raise the invoice
you add a second line for the tax , set the Income Account to your
Liabilities:TaxPayableDeferred account and enter the amount of the tax payable
in that line. This will create a credit to the Liabilities:TaxPayableDeferred
account with a matching debit added to the sum of the other lines to the A/R
account.
Wehn your tax liability is paid your check account is credited by the total of
the amount paid and the Liabilities:TaxPayableDeferred account is debited by the
same amount.
This is of course a generic treatment and may be altered by specific regulations
and law which may apply in your jurisdiction.
David Cousens
On Fri, 2021-10-22 at 00:01 +0200, Mattia Rizzolo wrote:
> Hi people!
>
> With the disclaimer that I'm keeping these books for myself, as I'm not
> required by law to keep them at all, here I come ask you about this
> specific tax.
>
> Also, this turned quite longer than I thought it would, actually while
> writing my thoughts cleared quite a bit... :) Guess that's a kind of
> "rubber duck debugging"!
> For the quicker version go straight to below where I describe my case in
> way more practical terms.
>
>
>
> Background:
> When I issue an invoice I may (or may not) have to pay a 2€ duty stamp
> and attach it to the invoice. That's an effect specific to the fact
> that I produced a document, and I also need to attach such duty stamp
> to credit notes, for example.
> Now, if I do a paper invoice, I most likely already bought weeks/months
> prior a stash of those duty stamps. Instead, if I'm doing an electronic
> invoice, the payment for those stamp is deferred to the next quarter.
> Furthermore, I may or may not (my choice) bill the customer for the
> expense of this duty stamp.
>
> So I am a bit lost on how to properly account for this thing. To me is
> an expense, that may or may not be charged back to the customer, but I
> would also like to gather data on, like, how many invoices I'm issuing
> that I am not billing the duty stamp on, so I wouldn't like to "hide"
> them into some random expense/income account.
> The different methods of actual payment of them (in advance or
> postponed) surely doesn't help make it straightforward.
>
> Probably the hardest part is that I would really like to tie the expense
> to each invoice. I have no clue if there even is a way to do that, but
> it doesn't seem like there is one. Handling invoices through the
> GnuCash invoice system makes it impossible to me to add random splits,
> is there even a chance I could do this?
> If not, guess I would be stuck creating a separate transaction manually
> each time I issue an invoice. (in the below examples, I'm referring
> specifically to the two splits that invoice Expenses:Tax:DutyStamps) and
> simply "linking" that expense to the invoice by the memo field.
>
>
>
>
>
> To clarify and recap, here was my thinking:
>
>
> 1. The accounts (simplified naming, I have a deeper tree):
> Balance
> Assets:Banks:Checking 500.00
> Assets:Cash 50.00
> Assets:AR 0.-
> Expenses:Tax:DutyStamps 0.-
> Income:Invoices 0.-
> Liabilities:Tax:DutyStamps:Pre 2.00-
> Liabilities:Tax:DutyStamps:Post 0.-
>
> I decided to separate the Pre and Post variant of duty stamps since
> they are after all handled completely differently and stashing them
> in a single account would only create confusion later on IMHO.
>
> 2. When I buy "paper duty stamps" (that can only be bought in cash…):
> Debit Credit Balance
> Assets:Cash 2.00 48.00
> Liabilities:Tax:DutyStamps:Pre 2.00 4.00-
>
> Here the Liabilities:Tax:DutyStamps:Pre represents a sort of prepaid
> expense, resulting in a credit for me, which is hence recorded as a
> negative liability.
>
> 3. When I issue an electronic invoice for which I am *not* charging the
> customer:
> Debit Credit Balance
> Expenses:Tax:DutyStamps 2.00 2.00
> Liabilities:Tax:DutyStamps:Post 2.00 2.00
>
> This is what I would love to have in my invoice posting transaction
> (the one that also bears A/R and Income), but that I fear my just
> simply not be possible.
>
> 4. When I issue an electronic invoice for which I am charging it back:
> Debit Credit Balance
> Expenses:Tax:DutyStamps 2.00 4.00
> Liabilities:Tax:DutyStamps:Post 2.00 4.00
> Assets:AR 2.00 2.00
> ?????????? 2.00
>
> To what should I match that AR? It ought to be some kind of Income,
> but I am not really sure, it's not really an income is it? It feels
> constrained to use Income:Invoices. I was half-thinking to match it
> against Expenses:Tax:DutyStamps (similarly to what one would do with
> credit card rebates), but GnuCash won't let me do that from within an
> invoice. Or am I looking at this from the wrong side and I should
> just get an Income:TaxCollection kind of account?
>
> 5. When I issue a paper invoice, not claiming back the duty stamp:
> Debit Credit Balance
> Expenses:Tax:DutyStamps 2.00 6.00
> Liabilities:Tax:DutyStamps:Pre 2.00 2.00-
>
> And there follows the rest of the invoice; like with case 3, beside
> this magic linking that I would love to have with these 2 splits and
> the actual invoice, I think nothing more is needed.
>
> 6. For the paper invoice claiming back the duty stamp, it should be like
> case 4 with the :Pre account, nothing else.
>
> 7. When I go to settle the postponed duty stamp and the end of the
> quarter I suppose I'll simply do:
> Debit Credit Balance
> Liabilities:Tax:DutyStamps:Post 4.00 0.00
> Assets:Banks:Checking 4.00 496.00
>
> And be done.
>
>
>
> Am I in the right direction? Do you spot anything totally wrong? And
> how would you handle these details I'm unsure about?
>
> Thank you in advance for any thought and input you might be able to give
> to me! :)
>
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