I have a new client that has no previous years' books so I have set up Quickbooks online for this fiscal year. There are two situations I am unsure of how to manage:
I'm glad to see you already have a solid understanding of your client's situation. The hard part is knowing what really happened, so I'm confident we'll have no problem recording this in QuickBooks Online. I have three options for you to consider, depending on how you need this credit balance to be reflected in the books. Determining the ideal way to approach this is work best-suited for an accountant, but I'm happy to help sort this out.
To represent this on their next tax return, you can create a Journal Entry with the default tax liability account (typically called GST/HST Payable). Picking this account gives you full control over your tax filing, as you can easily map the amount to your tax return. Simply select the desired line from the Sales Tax column. This has the same effect as recording adjustments on the return, but it can be done in a single journal entry dated within the next filing period.
Alternatively, you can record this credit as an instalment in a few easy steps:
This will record the credit on line 110 of the next filing.
Finally, you may want to consider marking the previous tax period as filed. Simply click Prepare return in your Sales Tax Centre and enter the desired period. Even if all the lines are at 0, you'll be able to record a payment to reduce the amount owing in the next period. The advantage with this option is that it allows you to specify the payment as being for a prior period, while dating it in the current period.
I want to make sure we get this sorted, so let me know how it goes!
Thank you Andre.
For the journal entry, which account is credited? Should I create a general prepaid expense or liability account, and then make an entry for credit value at the beginning of the new year that is debited when the first installment "payment" is made to use the credit?
I did as you suggested and filed a $0 return for the previous year GST, and applied the payment from current year, but now Quickbooks is showing that payment as included in this years balance. I tried to change the original return to show the amount of the payment as owing, instead of $0.00, but Quickbooks will not allow me to edit those details once it is filed.
I see what you mean, Sandra. Thanks for sending over some updates. I'd like to make two suggestions going forward. The first thing I'd recommend for you is to consult your accountant. For advice on which accounts to credit and debit, as well as the type of account to create (i.e. expense vs. liability account), you'll want their expert advice. We're here to help support your product-specific questions only.
It's great that you've decided to use the $0 filing suggestion made by my colleague above. If it's not displaying the information the way you'd anticipated, it's important that a member of our tech support team guides you through the steps in real-time to avoid any further confusion or discrepancies. I want to make sure the account is starting off in the best and most accurate way possible. It's always easier to fix things at the onset, rather than wait until further data has been entered.
Our tech support team will be able to answer any further questions you may have.