Sales Tax adjustments can be made during the filing process.
Please Note: Once a tax return has been filed from the “Prepare Tax Return” module you cannot undo/delete/void it. Therefore it is best to be certain of your return before creating it.
Follow the steps below to make the Sales Tax Adjustments while preparing a Sales Tax.
- Navigate to the Prepare Sales Tax module.
- Under the Adjust column click on the pencil icon for the Tax Return to be Adjusted.
- Add the Adjustment Amount.
- The change will be reflected in the Amount column.
- You can also check/void the adjustment made from the Tax Adjustment Centre.
You can also watch the video on how to manage Tax Adjustments?
What should be the adjustment account?
- The adjustment account is basically the offset account against which you want to create your tax liability. The adjusted amount would stay in the offset account.
- The amount you enter will be automatically credited from the tax liability account and debited to the offset account of your choice.
Would it be better to put the adjustment in a sales tax expense account (on P&L)?
- The business acts as a collection agency for the government by charging the sales tax. It will need to remit the government shortly after collecting the tax. When this is done, the business will reduce its cash and its sales tax liability.
- In this situation, the sales tax is not an expense and it’s not part of the business income. From the business’ perspective, sales tax is a liability to the government until it is remitted.