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Posted by Arno Martens on October 18, 2007, 10:37 am
Please log in for more thread options wrote:
>> Nightcheck wrote:
>>> We have a small company which does business in numerous states in
>>> which we charge the customer sales tax and then pay it monthly,
>>> quarterly etc. to the particular state and the sale tax we receive is
>>> put in the sales tax liability account..
>>>
>>> Some states offer a small discount if we remit the sales tax on time
>>> - in which case we can
>>> subtract it from the tax paid or occasionally, the state will send us
>>> a small check.
>>>
>>> Currently this discount is being counted as Income which I do not
>>> believe is correct and instead should be credited against that their
>>> A/ P account. Can anyone confirm I am not going crazy?
>>
>> I don't think so. A sales tax is a tax on a business. Discounts,
>> early-bird specials, and the like simply reduce the tax. Forget about the
>> Gross/Discount business and enter the amount you pay.
>
>How do you adjust your Sales Tax Payable account if you collected $1000 but
>you only owe $970 because you received a $30 credit from the state? You
>certainly don't want to leave that $30 on the account since it is no longer
>owed to the state. QB is going to nag you about owing the $30 so you really
>DO want to record that credit.
I get rid of it by JE to commissions.
I do see it as income as I am just a flow through channel.
The amount I collect I must pass on. When I get to keep some of it, it
is income in my books (pun intended).
>>> On a separate manner - I have been hearing that some companies are no
>>> longer capitalizing expensive software or expensing cheaper software ,
>>> for let's say under $100. and putting it in a separate expense
>>> account. They are putting all software purchases into an expenses
>>> account
>>> for "Licenses" (oddly enough, one company puts their software as well
>>> as their expenses paid for their annual sales tax licenses in the
>>> states where they do business) - on the theory you don't really don't
>>> own the software - you just have a license.
>>>
>>> I can see a few possible exceptions - annual renewal subscriptions,
>>> for let's say Anti- Virus software, etc. - but once you buy the
>>> software - It's yours to use for as many years as it is helpful
>>> regardless if technically the software companies say they only give
>>> you a license.
>>> Has anyone heard of this? Sounds a bit off base to me..
>>>
>>> Your opionions and guidance would be greatly appreciated..
>>
>> In my view, you have a choice whether to expense or amortize these things.
>> If you're having a bumper year, expense the items to reduce your tax
>> burden. If you expect future years to be better, amortize.
>
>If you elect the 179 deduction you basically end up expensing it in the year
>purchased.
>
>> As an aside, there's no need to spend money for anti-virus software. There
>> are numerous products available that do a better job, while using less
>> resources, than the commercial leaders (Norton and McCaffee).
>
>Very true. And practising safe computing also helps.
--
Arno
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