Thank you for your response - I have done all you say and on the invoices and bills the tax pulls through correctly. The problem I have is in the Cash Book or Accounting Transaction Tab as it is referred to. I upload the bank statement and then on certain transactions there is VAT/Tax claimable and I see no way to allocate the payment to the VAT/Tax account so it then pulls through into the Sales Tax report. For bank charges which are R6.86 I am not going to raise bills, I just need to have a button where you can say this item has tax on it.
@MeganRoxton Ah, I can definitely help you with this! From your Accounting > Transactions page, click into the transaction and then select Include Sales Tax. Once you add a sales tax to the transaction, the tax values will pull through to your Sales Tax Report. Here's a sample screenshot to show you what I mean:
For the classification of recoverable or non-recoverable, I have a clarification question. If I select "recoverable" will ALL sales tax I pay automatically be classified under a single account within the Chart of Accounts?
The reason for the question, the example given above doesn't work in my situation. For example, within Indiana, I have a reseller's certificate. I purchase materials for the purpose of making a product, which is then sold as a finished good. Materials I purchase for making a product would be "exempted" from sales tax because tax will be collected on the finished product when I sell it. So if a supplier charges sales tax, it would be "recoverable" or "exempt." However, sales tax I pay on office products such as copier paper, are not exempt because they are used by me in my company.
If I select "recoverable" will I be able to separate those taxes I pay to accurately reflect which ones are truly recoverable/exempt and which ones aren't?
Hi. I'm not sure how I can account for my taxes. I have captured all my Bills and for each I have added the appropriate tax which is recoverable. I then go to my transactions and assign payments to the Bills - this seems to work just fine on Purchases. On the Income side is where i have the problem. It's a retail business and the there are three rates of tax which my till system captures and reports for me. So I know how much tax I owe on any period of sales. Now in WAVE I just categorise the lodgements (Credit card and Cash) as "Product Sales" as the lodgements are made sporadically. I was thinking of a way to capture the Sales Tax in WAVE. If i create an invoice (say for a month of sales) and add appropriate sales tax it makes a double entry to Sales, so this doesn't seem like an option. So do I create Bills for the taxes owed at the end of each month ? Any suggestions?
Hi. I think I might have figured it out myself but please let me know if this is right. Each month I should create a Journal Entry Debiting Sales by the Sales Tax and Crediting the Sales Tax Account??
Hi @chgCreations . When yo create a tax, it creates a corresponding account for that tax in your Chart of Accounts. This means that if you're using the same tax, it will go to the same account. If you're using different taxes, it will go to different accounts.
Hey @Irish . Excuse me if I'm mistaken in what you're asking here, but based on your request, you should just be adding the Sales Tax to your income transactions instead of adding an additional invoice for it.
Hi Alex, yes that would be ideal - but my lodgements are coming into the Bank from Debit and Credit Card transactions and cash lodgements every day and from multiple shops - impossible to relate accurate taxes to those lodgements. I capture the Sales tax on Sales in the till systems (very accurately). So I cant account for it in the Income transactions, i have to input the figures for tax from the till systems at the end of every week or month. At least that's how I'm thinking.
Now I already have multiple tax accounts set up for the different levels of tax and I have used that on my purchases (bills) - seems to work fine (it records the tax I can claim back on my purchases). Do I use the same tax accounts (as they are the same levels of tax) for my tax on Sales (which I owe to the Government).
I believe the answer here would be yes. As long as you've created a sales tax under the Settings > Sales tax category (it creates a corresponding account under liabilities which is what you should be using), then it should good to use the same account here when you create a sales tax.
You could always filter out your accounts transactions report by that tax account which is set to non-recoverable!
Option 2
To set up a recoverable tax, I would head to settings > sales tax, create a sales tax with a unique name (so you know that it's different from the old one you've created, perhaps HST-Recov, a Canadian tax example). There is a checkbox when setting this up a new sales tax that allows you to make it recoverable. See image below
1) Create a new recoverable sales tax with a unique name, different from the old one.
2) You can select the checkboxes beside all of your transactions whose sales tax you'd like to remove, select edit at the top, change the category to tax, and remove the sales tax from those items. Do this for your expenses, invoices, bills etc. Be sure to apply the newly created sales tax to your transactions that you would like.
3) Once all transactions have the new tax applied, you should be able to delete the old non-recoverable tax (if you so wish) from the sales tax settings.
You will then be able to generate a sales tax report with recoverable tax showing up.
Don't hesitate to reach out if you need further clarification.
This article has more info and some good visuals if you need further assistance.
HI, I am finding a problem with taxes. I cannot record withheld income tax deducted by clients at source, i.e. at the time of payment of invoices. If I record the ACTUALLY PAID amount (i.e. invoiced amount less withholding income tax), the invoices are shown as partially paid. If I record full payment, it cannot be reconciled, because payment is always made after deduction of 10% withholding Income Tax. Kindly advise, how do I tackle with this issue?
Hi @Vesta05! You can add more than one sales tax to an invoice! You would have to add the taxes to each 'item' on the invoice (you won't be able to add it at the end with the total).
Hi @Andi! A non-recoverable tax is a tax you would have to remit the full amount you've collected, regardless of what you may have paid (in the same tax). I'm not sure where you are located but this blog goes over a Canadian example of a non-recoverable tax and how it impacted business.
Hi @ahthelife! There isn't a lot of difference but it comes down to the bookkeeping of recoverable vs. non recoverable taxes. In the case of non-recoverable taxes, there's really no benefit to the user tracking them on expenses.
Consider a $100 widget expense with 13% HST.
For a recoverable tax this would be book kept as:
$100 Widget expense
$13 HST expense
In the case of non-recoverable taxes, we roll the tax amount up into the base expense category so it would simply be:
$113 widget expense.
For this reason you don't see the sales tax expense in your reports for non-recoverable taxes.
Need at table (or link to an article) that shows the taxes in each state/county/municipality that are recoverable, and those that are not so we can easily plug them in, especially since they can't be changed or corrected in Wave!
Thanks for the suggestion! While we do not have a master list of recoverable/non-recoverable taxes in each state/county/municipality, it might be helpful to provide which state you were curious about so that we can try and track down some more pertinent information for you, in regards to recoverable/non-recoverable taxes
Thanks for your reply, Kristian. I live in Ohio, USA. And, I've been able to contact my local County Taxation office since I posted my question. They told me where to find the State's tax exempt schedules for recoverable sales tax. However, nobody has heard of or been able to explain the terms "HST" and "compound tax" that I read in your Help files!?! What does HST mean? And, are those uniquely Canadian tax terms?
Hey @rwalden! Thanks for that context, and I'm glad you were able to find those answers to your previous inquiry! As far as HST goes, that's a Canadian tax, which is why you wouldn't have much info around it! Compound taxes can be broken down pretty nicely by this Help Center article here.
Connor -
Thank-you for providing that Help Center article. However, I'd already read that and still have no context for understanding when a "compound" tax is used. Is that another strictly Canadian tax? For better understanding, could you please provide a real world example of a typical compound tax, and how it appears on a sales receipt when added to purchased goods or services? Thanks!
Compound taxes for example are when a government decides to consolidate its taxes into one, but it still might require separate reporting for tax purposes. For example an 8% PST and a 5% PST tax in Canada were compounded into an HST tax. Those percentages will be divided by the government but sometimes for taxing purposes you may be required to report on what contributions you've made to your local provincial or state taxes.
Googles example is:
A Compound Tax is a tax that is calculated on top of one or more Simple taxes. For example, Let the Product cost be $200 per unit. If the compound tax [composition of 4.5% VAT, 12.5% Service Tax, 2% Sales Tax] of Tax Value 2% is applied on the Product, then the cost of the Product after tax will be $220.18.
I'd recommend reaching out to an accountant if you have some further questions!
is there an option to edit the recoverable tax amount which is used in the creation of bills. Currently I can edit it but it doesn't get saved. Any help would be appreciated
You won't be able to edit a that tax is applied to invoices or transactions or bills etc. If the tax has been created already, you'll need to create a new one rather than edit it.
So what I would do is:
1) Create a new recoverable sales tax with a unique name, different from the old one.
2) You will need to open the bills/invoices individually and remove the old tax then add your new one here.
3) Once all transactions have the new tax applied, you should be able to delete the old non-recoverable tax (if you so wish) from the sales tax settings. (Taxes won't be able to be deleted unless all transactions no longer have that tax. Check your account transactions (general ledger) report and filter by the old tax account to see).
You will then be able to generate a sales tax report with recoverable tax showing up.
Don't hesitate to reach out if you need further clarification.
This article has more info and some good visuals if you need further assistance.
Is there a way to set up taxes so that only a portion is recoverable, or to see a breakdown of categories on the report? E.g. GST in New Zealand is a recoverable tax, EXCEPT when it's for things like meals or entertainment etc, in which case it's only 50% recoverable. Is there an easy way of keeping track of that? Thanks!
Hey @chrisclose , I'm afraid there isn't. You could break these taxes down into two separate taxes in Wave to apply it to different items but then you'd have to work with each separate tax to get the appropriate numbers.
Hello there! I'm kind of a newbie here on Wave since I opened my account today I have one question about these taxes. Does it depend on the state, if their sales tax is recoverable or not? If so, where can I see if they have recoverable sales tax or not (since you mentioned, that in some states tax is T1 - recoverable and in other states, it is T2 - non-recoverable?
Hey @Nejc! Great question here. I'm thinking you may want to reach out to a local tax professional to ensure that you're receiving the best advice possible with regards to taxation in your account! The Support Team are not accountants or tax pros, so we wouldn't want to get you in any hot water with erroneous advice
Hi Alex, in PH the VAT charged upon PURCHASES of good & services is called INPUT VAT that normally goes to an ASSET Account, while in WAVEs App it is automatically part of LIABILITY.
In SALEs/ REVENUE we record OUTPUT VAT that goes to LIABILITY and gets set-off against INPUT VAT at the end of every month to determine the NET OUTPUT VAT payable to govt.
How can the PURCHASES INPUT VAT be reflected in ASSET account for WAVES App.?
and Why is it called SALES TAX where in fact it should be PURCHASES TAX or INPUT TAX on PURCHASES.?
THANK YOU VERY MUCH IN ADVANCE FOR YOUR HELP ON THIS MATTER.
Comments
Thank you for your response - I have done all you say and on the invoices and bills the tax pulls through correctly. The problem I have is in the Cash Book or Accounting Transaction Tab as it is referred to. I upload the bank statement and then on certain transactions there is VAT/Tax claimable and I see no way to allocate the payment to the VAT/Tax account so it then pulls through into the Sales Tax report. For bank charges which are R6.86 I am not going to raise bills, I just need to have a button where you can say this item has tax on it.
@MeganRoxton Ah, I can definitely help you with this! From your Accounting > Transactions page, click into the transaction and then select Include Sales Tax. Once you add a sales tax to the transaction, the tax values will pull through to your Sales Tax Report. Here's a sample screenshot to show you what I mean:
Thank you it works!
For the classification of recoverable or non-recoverable, I have a clarification question. If I select "recoverable" will ALL sales tax I pay automatically be classified under a single account within the Chart of Accounts?
The reason for the question, the example given above doesn't work in my situation. For example, within Indiana, I have a reseller's certificate. I purchase materials for the purpose of making a product, which is then sold as a finished good. Materials I purchase for making a product would be "exempted" from sales tax because tax will be collected on the finished product when I sell it. So if a supplier charges sales tax, it would be "recoverable" or "exempt." However, sales tax I pay on office products such as copier paper, are not exempt because they are used by me in my company.
If I select "recoverable" will I be able to separate those taxes I pay to accurately reflect which ones are truly recoverable/exempt and which ones aren't?
Hi. I'm not sure how I can account for my taxes. I have captured all my Bills and for each I have added the appropriate tax which is recoverable. I then go to my transactions and assign payments to the Bills - this seems to work just fine on Purchases. On the Income side is where i have the problem. It's a retail business and the there are three rates of tax which my till system captures and reports for me. So I know how much tax I owe on any period of sales. Now in WAVE I just categorise the lodgements (Credit card and Cash) as "Product Sales" as the lodgements are made sporadically. I was thinking of a way to capture the Sales Tax in WAVE. If i create an invoice (say for a month of sales) and add appropriate sales tax it makes a double entry to Sales, so this doesn't seem like an option. So do I create Bills for the taxes owed at the end of each month ? Any suggestions?
Hi. I think I might have figured it out myself but please let me know if this is right. Each month I should create a Journal Entry Debiting Sales by the Sales Tax and Crediting the Sales Tax Account??
Hi @chgCreations . When yo create a tax, it creates a corresponding account for that tax in your Chart of Accounts. This means that if you're using the same tax, it will go to the same account. If you're using different taxes, it will go to different accounts.
Hey @Irish . Excuse me if I'm mistaken in what you're asking here, but based on your request, you should just be adding the Sales Tax to your income transactions instead of adding an additional invoice for it.
Hi Alex, yes that would be ideal - but my lodgements are coming into the Bank from Debit and Credit Card transactions and cash lodgements every day and from multiple shops - impossible to relate accurate taxes to those lodgements. I capture the Sales tax on Sales in the till systems (very accurately). So I cant account for it in the Income transactions, i have to input the figures for tax from the till systems at the end of every week or month. At least that's how I'm thinking.
Now I already have multiple tax accounts set up for the different levels of tax and I have used that on my purchases (bills) - seems to work fine (it records the tax I can claim back on my purchases). Do I use the same tax accounts (as they are the same levels of tax) for my tax on Sales (which I owe to the Government).
Hey there @Irish
I believe the answer here would be yes. As long as you've created a sales tax under the Settings > Sales tax category (it creates a corresponding account under liabilities which is what you should be using), then it should good to use the same account here when you create a sales tax.
I there any way to see the amount of taxes paid even if it's set to non-recoverable? I could have sworn I set it to recoverable but I now see I didn't
Hey @R_kow2019
Option 1
You could always filter out your accounts transactions report by that tax account which is set to non-recoverable!
Option 2
To set up a recoverable tax, I would head to settings > sales tax, create a sales tax with a unique name (so you know that it's different from the old one you've created, perhaps HST-Recov, a Canadian tax example). There is a checkbox when setting this up a new sales tax that allows you to make it recoverable. See image below
1) Create a new recoverable sales tax with a unique name, different from the old one.
2) You can select the checkboxes beside all of your transactions whose sales tax you'd like to remove, select edit at the top, change the category to tax, and remove the sales tax from those items. Do this for your expenses, invoices, bills etc. Be sure to apply the newly created sales tax to your transactions that you would like.
3) Once all transactions have the new tax applied, you should be able to delete the old non-recoverable tax (if you so wish) from the sales tax settings.
You will then be able to generate a sales tax report with recoverable tax showing up.
Don't hesitate to reach out if you need further clarification.
This article has more info and some good visuals if you need further assistance.
https://support.waveapps.com/hc/en-us/articles/115004972006-Adding-sales-taxes-
HI, I am finding a problem with taxes. I cannot record withheld income tax deducted by clients at source, i.e. at the time of payment of invoices. If I record the ACTUALLY PAID amount (i.e. invoiced amount less withholding income tax), the invoices are shown as partially paid. If I record full payment, it cannot be reconciled, because payment is always made after deduction of 10% withholding Income Tax. Kindly advise, how do I tackle with this issue?
Hi, how do i add both sales taxes the GST and QST for Quebec, Canada on the invoice? There's only provision for one.
Feel dumb but don't know what a "non-recoverable" tax woud look like or who it would pertain to in the examples given. Need a difintion
Hi @Vesta05! You can add more than one sales tax to an invoice! You would have to add the taxes to each 'item' on the invoice (you won't be able to add it at the end with the total).
Hi @Andi! A non-recoverable tax is a tax you would have to remit the full amount you've collected, regardless of what you may have paid (in the same tax). I'm not sure where you are located but this blog goes over a Canadian example of a non-recoverable tax and how it impacted business.
How do you know if it's recoverable or not. These two scenarios are the same.
Hi @ahthelife! There isn't a lot of difference but it comes down to the bookkeeping of recoverable vs. non recoverable taxes. In the case of non-recoverable taxes, there's really no benefit to the user tracking them on expenses.
Consider a $100 widget expense with 13% HST.
For a recoverable tax this would be book kept as:
$100 Widget expense
$13 HST expense
In the case of non-recoverable taxes, we roll the tax amount up into the base expense category so it would simply be:
$113 widget expense.
For this reason you don't see the sales tax expense in your reports for non-recoverable taxes.
Need at table (or link to an article) that shows the taxes in each state/county/municipality that are recoverable, and those that are not so we can easily plug them in, especially since they can't be changed or corrected in Wave!
Good afternoon @rwalden,
Thanks for the suggestion! While we do not have a master list of recoverable/non-recoverable taxes in each state/county/municipality, it might be helpful to provide which state you were curious about so that we can try and track down some more pertinent information for you, in regards to recoverable/non-recoverable taxes
Thanks for your reply, Kristian. I live in Ohio, USA. And, I've been able to contact my local County Taxation office since I posted my question. They told me where to find the State's tax exempt schedules for recoverable sales tax. However, nobody has heard of or been able to explain the terms "HST" and "compound tax" that I read in your Help files!?! What does HST mean? And, are those uniquely Canadian tax terms?
Hey @rwalden! Thanks for that context, and I'm glad you were able to find those answers to your previous inquiry! As far as HST goes, that's a Canadian tax, which is why you wouldn't have much info around it! Compound taxes can be broken down pretty nicely by this Help Center article here.
Connor -
Thank-you for providing that Help Center article. However, I'd already read that and still have no context for understanding when a "compound" tax is used. Is that another strictly Canadian tax? For better understanding, could you please provide a real world example of a typical compound tax, and how it appears on a sales receipt when added to purchased goods or services? Thanks!
Hey @rwalden
Compound taxes for example are when a government decides to consolidate its taxes into one, but it still might require separate reporting for tax purposes. For example an 8% PST and a 5% PST tax in Canada were compounded into an HST tax. Those percentages will be divided by the government but sometimes for taxing purposes you may be required to report on what contributions you've made to your local provincial or state taxes.
Googles example is:
A Compound Tax is a tax that is calculated on top of one or more Simple taxes. For example, Let the Product cost be $200 per unit. If the compound tax [composition of 4.5% VAT, 12.5% Service Tax, 2% Sales Tax] of Tax Value 2% is applied on the Product, then the cost of the Product after tax will be $220.18.
I'd recommend reaching out to an accountant if you have some further questions!
is there an option to edit the recoverable tax amount which is used in the creation of bills. Currently I can edit it but it doesn't get saved. Any help would be appreciated
Hey there @Aktharhafeez
You won't be able to edit a that tax is applied to invoices or transactions or bills etc. If the tax has been created already, you'll need to create a new one rather than edit it.
So what I would do is:
1) Create a new recoverable sales tax with a unique name, different from the old one.
2) You will need to open the bills/invoices individually and remove the old tax then add your new one here.
3) Once all transactions have the new tax applied, you should be able to delete the old non-recoverable tax (if you so wish) from the sales tax settings. (Taxes won't be able to be deleted unless all transactions no longer have that tax. Check your account transactions (general ledger) report and filter by the old tax account to see).
You will then be able to generate a sales tax report with recoverable tax showing up.
Don't hesitate to reach out if you need further clarification.
This article has more info and some good visuals if you need further assistance.
https://support.waveapps.com/hc/en-us/articles/115004972006-Adding-sales-taxes-
Is there a way to set up taxes so that only a portion is recoverable, or to see a breakdown of categories on the report? E.g. GST in New Zealand is a recoverable tax, EXCEPT when it's for things like meals or entertainment etc, in which case it's only 50% recoverable. Is there an easy way of keeping track of that? Thanks!
Hey @chrisclose , I'm afraid there isn't. You could break these taxes down into two separate taxes in Wave to apply it to different items but then you'd have to work with each separate tax to get the appropriate numbers.
Hello there! I'm kind of a newbie here on Wave since I opened my account today
I have one question about these taxes. Does it depend on the state, if their sales tax is recoverable or not? If so, where can I see if they have recoverable sales tax or not (since you mentioned, that in some states tax is T1 - recoverable and in other states, it is T2 - non-recoverable?
Thank you.
Hey @Nejc! Great question here. I'm thinking you may want to reach out to a local tax professional to ensure that you're receiving the best advice possible with regards to taxation in your account! The Support Team are not accountants or tax pros, so we wouldn't want to get you in any hot water with erroneous advice
Hi Alex, in PH the VAT charged upon PURCHASES of good & services is called INPUT VAT that normally goes to an ASSET Account, while in WAVEs App it is automatically part of LIABILITY.
In SALEs/ REVENUE we record OUTPUT VAT that goes to LIABILITY and gets set-off against INPUT VAT at the end of every month to determine the NET OUTPUT VAT payable to govt.
How can the PURCHASES INPUT VAT be reflected in ASSET account for WAVES App.?
and Why is it called SALES TAX where in fact it should be PURCHASES TAX or INPUT TAX on PURCHASES.?
THANK YOU VERY MUCH IN ADVANCE FOR YOUR HELP ON THIS MATTER.