How to enter an expense associated with a liability

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  • Updated 2 months ago
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Hi - I enter a liability into the account Tax Payable and then when I pay the bill I transfer the Tax Payable amount into my bank account. However, I need to also raise an expense so that I can see Tax Paid in the Profit and Loss.

Any ideas how to achieve this?

I am using Reckon Accounts Personal 2016
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Ilona Kovacs

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Posted 2 months ago

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Kevin Russell, Accredited Partner

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This completely wrong. GST is NOT a business expense. You need a qualified certified bookkeeper to get you up to speed.
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Ilona Kovacs

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Sorry - not talking about GST - talking about Income Tax
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Davo

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I assume you are talking about Income tax not GST. When you make a profit you will debit income tax expense, hitting the Profit & Loss, and credit income tax payable thus moving the amount of tax to be paid to the balance sheet.
When you make the payment you will debit income tax payable and credit bank. The tax paid will not hit your Profit & Loss a second time, but will appear in your statement of cashflows.
Best to speak to your accountant.

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Ilona Kovacs

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Thanks - I agree with your explanation.

My question is how do I do that in Reckon?

I have created an Account called Tax Payable - I credit that - how do I debit the expense? If I do it from the Tax Payable account then I am unable to make the payment.

I can’t work out where I debit Tax Expense - from which account do I do that from?

Sorry - I hope I am getting my point across??

Unfortunately my accountant doesn’t do Reckon.

I appreciate your help
Ilona
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Kevin Russell, Accredited Partner

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If you insist you can enter a bill with the top line as the expense and a second line for the liability as a minus. The net will be nil. Honestly it is not this complicated. And I would fire your accountant if you were I
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Kevin Russell, Accredited Partner

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Dave I wouldnt assume its company or income tax. Reference was made to the Tax Payable account or GST. I already mentioned its a job for the bookkeeper or accountant
(Edited)
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Ilona Kovacs

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Its not the fundamentals I am struggling with - its how to enter it into the software ??
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David M

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When you put the entry in the Tax payable account, the category you charge it to is Income tax expense.
When you pay the tax from the bank account, the transfer account will be Income Tax payable.
Unless your accountant has and is being very valuable to you, I would find a new one, who understands Quicken. You clearly need help with both accounting concepts and practical use of the software.
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Kevin Russell, Accredited Partner

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David the software is called Reckon. Quicken hasnt been used for four years. Illona if you insist you could enter the tax payable as a bill. David your comment about the Accountant is correct. He sounds like a 24k dud.
(Edited)