Recording Witholding Tax (or Schedular payments)
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Kieran Thomas
Member Posts: 2 ✭
I am a self employed contractor who has witholding tax (or Schedular payments) deducted from my invoice before payment. If I leave the invoice value as the full amount it will not reconcile in my bank accounts and I still need to be able to record my schedular tax and full amount of income. So my question is: How can I enter this into my Invoice/accounts without: a) reducing my overall income, and b)recording how much WHT I have paid.
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Hi Kieran
Raise the invoice for the full amount as usual, tracked to an income account.
Set up a new item code call tax - tracked to an asset account 'income tax Paid' (or similar)
Raise a credit note for the amount of tax deducted from your invoice using the tax item code- then apply the credit note to the invoice. The invoice will be paid in full by the net payment from the customer and the tax will be tracked as well.
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I'm new to Reckon One, but in other software I would have 2 transactions - the invoice payment deposit, and a 'spend money' or 'write cheque' allocated to the WHT Asset Account. Then I would reconciled the one bank line, which is the net of the two, against those 2 transactions. I'm still getting used to Reckon One and would be keen to know how you reconcile multiple transactions against a single bank line?0
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Hi Jen
Not sure what software you were using but that would be an extreme messy way to have to enter. You are making 2 false entries (one for full amount of payment received against the invoice + a false payment made to ATO) - it would work by ticking both in bank rec, but for audit purposes it would be a mindfield as there is no record of what you are trying to do.
Invoice & credit note stating it was a reduction for tax deduction leaves a clear record anyone can follow.
Probably just as well you are now using Reckon One1 -
Eek yes i see the problem my solution! Gosh I think it's been too long since I've had to deal with VWT! :-O Thanks for the correction Kwikbooks :-)0
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That is great, thanks for your help!0
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