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Experienced Member

Sales Tax Payment Account

This is a variation of similar question that was posted a few years ago.

Our small business pays sales tax on an annual basis.  We also made the mistake of not using the “Pay Sales Tax” feature to record payments.  Unlike the original question, we did use the “Sales Tax Payable” account in creating the payment, so the P&L for those years is correct.

The problem is that “Sales Tax Liability” summary is not correct in its detail.  The bottom line is correct, but it shows the payments (credits) as separate lines labeld “- Other” instead of zeroing out the proper line.  I know it is my fault for not using the “Pay Sales Tax” feature to record payments, and am looking for the cleanest way to straighten it out.

Any guidance would be appreciated.  

Solved
Best answer 12-10-2018

Accepted Solutions
Established Community Backer ***

"We also made the mistake of not using the “Pay Sales Tax...

"We also made the mistake of not using the “Pay Sales Tax” feature to record payments.  Unlike the original question, we did use the “Sales Tax Payable” account in creating the payment, so the P&L for those years is correct."

Meaning your entry is not seen at all, but you bypassed the Function.

"The problem is that “Sales Tax Liability” summary is not correct in its detail."

Fix it any time you are ready to fix it, then.

"and am looking for the cleanest way to straighten it out."

Pay Sales Taxes properly, now, for each and every payment you made the Wrong way. Use that same date and check # and match the amount. Delete the Wrong Entries.

Now Banking has not changed; you replaced the wrong transaction Type with the right one, paralleling the exact info. You affected Cleared Status, so it is time to do a Mini-Rec or Interim Reconciliation.

Use the same Statement as just previously used and the ending date and balance. Ignore the beginning balance. It is the Net of all cleared transactions and you know why it is wrong. Ignore it. Clear only your Recreated transactions that you know were previously process by the bank and cleared previously. Bottom right, you see a difference of 0 and you are back on track.



2 Comments
Established Community Backer ***

"We also made the mistake of not using the “Pay Sales Tax...

"We also made the mistake of not using the “Pay Sales Tax” feature to record payments.  Unlike the original question, we did use the “Sales Tax Payable” account in creating the payment, so the P&L for those years is correct."

Meaning your entry is not seen at all, but you bypassed the Function.

"The problem is that “Sales Tax Liability” summary is not correct in its detail."

Fix it any time you are ready to fix it, then.

"and am looking for the cleanest way to straighten it out."

Pay Sales Taxes properly, now, for each and every payment you made the Wrong way. Use that same date and check # and match the amount. Delete the Wrong Entries.

Now Banking has not changed; you replaced the wrong transaction Type with the right one, paralleling the exact info. You affected Cleared Status, so it is time to do a Mini-Rec or Interim Reconciliation.

Use the same Statement as just previously used and the ending date and balance. Ignore the beginning balance. It is the Net of all cleared transactions and you know why it is wrong. Ignore it. Clear only your Recreated transactions that you know were previously process by the bank and cleared previously. Bottom right, you see a difference of 0 and you are back on track.



Experienced Member

Thank you, we recovered quickly from our error by followi...

Thank you, we recovered quickly from our error by following the recommended steps.