Vendor Collection Credit

benjofisch

Hello,

I collect sales tax in New York City and State on most services that I offer. When sales taxes are submitted each quarter, you get to keep a portion of what you collected as a "Vendor Collection Credit" -- something around 5%. I was wondering how to account for this in Wave so that I don't overpay sales tax the next quarter, since, as far as Wave knows, it appears I underpaid my total liability. A journal transaction should debit Sales Tax Liability and credit.... what exactly?

Thank you,
Ben

Mikeg

@benjofisch,
If you were doing journal entries is would be a Debit sales tax payable a credit to cash and a credit to other income for the vendor credit.

jbarker36

Hello, I paid my NY Sales Tax online and it was debited from my Business Checking account which in turn is listed as a Withdrawal in Wave, which is good. What I am not following is the information written above for the Vendor Collection Credit. NY State gave me a credit of $39.58 but I don't know how to enter this in to lower the amount of NY Sales Tax that was expected for the quarter as Wave thinks I paid less. I don't understand your instructions above to fix this discrepancy.

Mikeg

@jbarker36,
You will need to do a journal entry. Categorize the payment to the liability. Then debit sales tax payable and credit Other Income - Vendor credits. You may need to create an income account in your chart of accounts.