Splitting receipts between business and personal
Catherine Willems
Member Posts: 1
How is the sales tax dealt with when splitting a receipt between business and personal accounts? I am splitting my fuel receipts to account for the business use portion and am wondering how the tax portion of the receipt is dealt with.
I originally uploaded the receipt to my business account and then split it and moved the personal portion to my personal account. Does the sales tax get split as well? I'm concerned that the full sales tax is still being recorded in the business account.
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Hi @Catherine Willems.
When you split a transaction and there is already a tax associated with that transaction, it will always attach the full tax amount to the first part To fix this, you have to click on edit next to the tax amount for that part, and click on update. You'll then be able to add sales taxes to all the other parts.
It's a little unintuitive because we don't expect out users to split receipts between their personal and business accounts. You might have an easier time keeping track of your mileage instead of splitting your gas receipts. You'll have to comply with the rules set out by your tax administration, but it would very likely mean a bigger reimbursement. If you choose to explore that option, here's how to log your mileage in Wave.
Hi @Alexia,
As a sole proprietor I quite often have expenses that I must split between business and personal use for income tax purposes. For example my monthly bill for my mobile phone. I can only claim a portion of the bill as a business expense (the portion that represents business use) and the rest is a personal expense. I have had a number of issues trying to use Wave as a sole proprietor and therefore now only use it for invoicing. I would love to use Wave for all my accounting needs as it is one of the easiest systems I've tried but that split between personal and business doesn't work for a sole proprietor. I would much rather have one set of books that has separate categories for expenses that I can claim on my tax return at the end of the year. I file in Canada and all my business activities go on the Form T2125.
Hi, @TimLeon.
I'll start by saying that I'm not an accountant, and as such, I can't give advice on tax accounting. I'll help you how I can, but I do recommend talking to an accountant about this.
How do you pay that bill? It'll be handled differently if you pay it from your personal bank account than if you do from your business' bank account. Splitting a bill this way isn't impossible, but it is going to be a bit of work. If you can give me a bit more detail about the process on your end, I'll help you account for it in Wave.
Hi Catherine, can you clarify this process? I moved the personal portion to my personal account. How do you do this? You split it and set the 2nd category to Owner Investment / Drawings? Thank you
I thought I'd let you know that this happens all the time. Costco is a great example - they prefer if you only do one transaction, but I am not lining up twice for a jug of milk plus a pack of printer ink.
The payment is on one payment card (usually my MasterCard) and then the items on that receipt need to be assigned to either personal expense or a business category. The tax should definitely follow the individual receipt items when they are reassigned.
@Michael_L Thanks for your feedback on this. Your explanation definitely provides me with a more thorough understanding of why this may cause issues for your bookkeeping. I'll definitely be happy to pass this feedback along to the team here for them to consider the possibilities to a change in approach in this specific case. If anyone else has any other sorts of reasoning as to why this could be problematic, we are all ears!
@JordanFromWave
It would be helpful to be able to split receipts to different categories. For example, as a farmer, I have to file expenses with Canada Revenue Agency under about 30 different categories. If I buy "small tools" on the same receipt as I buy "containers and twine", I can't file each amount under the necessary categories. What I have started to do is to file the same receipt twice and entering the total for each category. Thanks.
Hi @ASp . What you can do here is actually go into the transaction itself that's created when Wave imports the receipt into the platform, and split this into as many parts as necessary. You can then categorize each split transaction into a different expense category.