How to do journal entry for last year's contractor GST/HST?

Accountinggeek · ‎June 20, 2019

We have a contractor who was paid say a total of $1412.50 semimonthly. We recorded this with no sales tax for the last year, however, in fact this contractor should be charging HST. So now we need to make an journal entry to fix the missing GST/HST.

I don't want to post directly to the GST/HST Payable account via journal entry, as it will not show up when we file the sales tax return.

Any advice on how to fix the missing GST/HST for last year?

Thank you in advance!

AddieC · ‎June 20, 2019

Hi there,

Recording the necessary sales tax on your transactions is really important for any business owner. Luckily, QuickBooks Online helps you sort out sales tax in many different ways. I'd be happy to get you back on track with this.

If you have to account for the GST/HST on the transactions for your contractor, don't worry. There's two options for ways on how to remedy this. The first option will be to create a Sales Tax Adjustment. This allows you to fine-tune your sales tax filings in QuickBooks Online. You can follow along with this article to see exactly how to do this so that you can account for the missing GST/HST: Adjust Sales Tax. This is going to be the easier and more efficient way to ensure you're filing the correct amount of sales tax, however keep in mind that this won't be reflected on the transactions you've created.

The second option is where you can manually adjust each transaction. The steps on how to do that would be different depending on how you've recorded the expense/bill in your account. Simply edit each transaction and include GST/HST. Then, when you file your sales tax, all the necessary amounts will be included.

I hope this helps clear things up for you. If you have any questions, or need help editing prior transactions, please let me know. I'm happy to help.

Have a great day.

Accountinggeek · ‎June 20, 2019

Thanks AddieB.

Other than these two options, is there a way I can make the actual journal entries to fix this?

We have done our year end, and would wish NOT to change anything directly on the actual transactions.

Anonymous · ‎June 20, 2019

I see what you mean. You can create a single expense transaction to record the tax amount only. To do so, follow these steps:

Select the (+) icon
Select Expense
Select the Payee, Payment date, and Payment method as needed. Make sure to pick a payment date that corresponds - or as close as possible - to the date of original expenses you made for this contractor.
Input the first item line: select the CATEGORY and input an amount of $1 and assign the proper HST tax code.
For the second item line, select the same CATEGORY and input an amount of $-1 and assign the Out of Scope tax code.
At this level you can edit the HST amount box to input the exact amount you need.
Select Save and close.
The HST amount you entered above will now show in your Sales Tax center. to see it, select Taxes from the left menu, then select the Sales Tax tab.

If you wish to use journal entries to move funds around, your accountant would be better suited to provide you with the proper way of doing it. QuickBooks Online lets you invite your accountant for a seamless collaboration. To do so, check this community article on how to manage an accountant user in QuickBooks Online. If you don't have an accountant, you can find a certified ProAdvisor in your area through this link: https://quickbooks.intuit.com/ca/find-an-accountant/.

Let me know if you have any other questions.

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How to do journal entry for last year's contractor GST/HST?