Solved

Recording Income Tax

  • 1 May 2023
  • 2 replies
  • 52 views

Userlevel 6
Badge +3

Hello Community,
I have a requirement where a company has been selling their items to their customers.
Here, they are recording the VAT for the sales as well as the income tax one the same record. So how shall I record the Income Tax on the same? Kindly guide me.

 

Thanks in advance.

icon

Best answer by aaghaei 3 May 2023, 16:03

View original

2 replies

Badge +18

Hello,

Can you please provide more details about how your taxes work?  Perhaps naming the country and taxes will cause someone with the same taxes and country to respond with most helpful answers.

For example, please show us a screen shot where the sales tax and income tax needs to be recorded on the same record. Show us what kind of reporting you need. Explain whether the sales tax and income tax are paid by the customer, or not.

In the US we group taxes by Category and by Zone (geographical region). Therefore we can calculate and report sales tax on AR Invoices along with separate charges that are not sales tax … such as  explosives safety charges from the state.

Thank you.

Userlevel 7
Badge +8

The right question here I believe is why should record “Income Tax” based on sales at all. IT is a derivative of EBIT meaning not only COGS but also G&A expenses are deducted from Revenue and in addition adjusted for Tax & Accounting different practices as well as unqualified expenses. That is why when we do our taxes there is always an Accounting Profit to Taxable Income reconciliation and usually is pretty complicated. In all my career life and working in a few countries and being familiar with some others, I have never heard of such a practice and I do not believe it makes sense at all unless the terminology is used for a different purpose.

Reply


About Acumatica ERP system
Acumatica Cloud ERP provides the best business management solution for transforming your company to thrive in the new digital economy. Built on a future-proof platform with open architecture for rapid integrations, scalability, and ease of use, Acumatica delivers unparalleled value to small and midmarket organizations. Connected Business. Delivered.
© 2008 — 2024  Acumatica, Inc. All rights reserved