Uncollected Sales Tax on Open Invoices
elifad
Member Posts: 1
My state doesn’t require paying sales tax if not collected. I noticed my sales and use tax report includes amounts of sales tax even if the invoice remain unpaid. Also, there are invoices that are partial paid in one month and balance on following month. Is there a way to only show the report based on actual collected collected tax on that month?
0
Comments
Hi @elifad.
Wave uses accrual-based accounting, which means transactions are created the second an invoice is made. This include all tax calculations. In essence, even if you don't have that money in your bank account, it is considered yours, which is why Wave calculates tax this way. This isn't related to tax legislation, but to different styles of approaching your books.
You'll be paying the same amount of taxes in the end it'll just be distributed differently. There's a workaround to help you close out your year using cash-based accounting, and you can find it here.
Let me know if that helps!