Taxes Paid on Owner Paid Expenses

mbap13 · ‎November 11, 2023

Hi everyone, my partner and I have recently established a catering/private chef company, we are using our own funds to launch the business and pay for any start up expenses with our personal credit card (to maximize points on credit card). I have been recording these transactions via journal entry debit expense account (fees, web design, start up costs, etc.) and crediting shareholder contribution. The costs and appropriate tax paid on business items (BC pst/gst) is recorded on this journal entry and each receipt or invoice is then attached.

However the issue I am having is that the tax I have paid isn't showing up when I go into sales tax. Shouldn't it be recorded somewhere so I can claim ITC?

Also we don’t have any revenue yet and are acquiring supplies and items.

Thanks so much,

Mike

JamesM4 · ‎November 13, 2023

Hello mbap13,

Thanks for contacting us here. Congrats on establishing a catering/private chef company! I'll be glad to share more info so you're on the right track with your work.

Recording your transactions the correct way is vital for ensuring your books remain accurate. That being said, I recommend consulting an accounting specialist for expert advice. This ensures your taxes are recorded in a way that allows for you to navigate the Sales Tax module with peace of mind. You can also get in touch with a professional using this link here. Other accounting professionals are able to see this post in the Community and this will allow them to chime in.

Let me know if this info helps. I'm here to steer you in the right direction.

DJF-CPA · ‎November 13, 2023

Just to understand this better, are you entering a two line journal entry like this:

Line 1 - Debit the expense for $100 and then select HST at 13% under the "Sales Tax" column

Line 2 - Credit Owners Equity for $113 (the HST is automatically recorded as a debit)

If this is how you are entering it, it should show up on your sales tax report. Can you confirm?

danlarocca · ‎December 12, 2023

I have the same need.

I tried to enter a journal entry but the tax box doesn't allow input.

Do I have to do a separate journal entry for the HST??

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Taxes Paid on Owner Paid Expenses