2023-09-19 GnuCash IRC logs
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18:12:49 <Luk6655> I'm slightly confused regarding account type one should use for tax (for examlpe VAT/sales tax) accounting. For example if one creates UK VAT Accounts, VAT calculation accounts are of type Liability and Asset. Why not A/Payable and A/Reiceivable ?
18:13:16 <Luk6655> It seems to me A/Payable and A/Receivable would be more suitable as one has to pay/will receive that calculated VAT at some point
18:13:26 <Luk6655> does this make sense?
18:16:26 <jralls> Luk6655 perhaps conceptually, but trying to do that in GnuCash will break billing and invoicing.
18:17:26 <jralls> So you have to use other asset and liability accounts to track your VAT accruals.
18:17:31 <Luk6655> jralls, oh, I see,
18:18:47 <Luk6655> I might try just to see how it breaks
18:19:38 <jralls> OK, but not on your production file! ;-)
18:20:36 <Luk6655> :-) sure
18:21:10 <Luk6655> I see it will not allow me to change once there are transactions already posted there when it was set as liability
18:21:48 <jralls> You might search gnucash-user (https://wiki.gnucash.org/wiki/Mailing_Lists) for VAT and GST. There are quite a few discussions about how to set it up in various countries.
18:25:04 <Luk6655> yes, I'll do that, thanks
18:52:36 <Luk6655> I searched the mailing list, but I haven't found any answers for how do people log VAT/sales tax payments? I mean, the actual amounts of tax owed etc calculate fine, when you pay the tax do you just post a transaction to the tax liability account? It seems this is wrong as two sides of this transaction should be the asset you're paying from (bank acct) and the expense account. So how to decrease the liability once the tax has been paid?
19:01:02 <Luk6655> I imagine it would be the same with sales tax (for example in US)
19:05:34 <Luk6655> it seems to me like there is some transaction missing, as there are 3 account types to record in (Asset:bankAcct, Expense:taxPaid, Liability:taxOwed). But with one transaction I can only record in 2 accounts, so this has to be 2 transactions therefore another account has to be added, but what kind?
19:09:07 <jralls> This is accrual accounting so you book the expense at the same time you post the liability (i.e. DR Expense:VAT, CR Liabilities:VAT Owed) and when you pay it's DR Liabilities:VAT Owed, CR Assets:Current:Bank.
19:12:21 <Luk6655> Is this what people normally do? It seems weird to record tax owed in an expense account before it is paid
19:16:59 <Luk6655> Also, when the liability is posted it records as a split transaction
19:17:45 <Luk6655> anyway, I have to finish for the day, it would be so much simpler if there was some example accounts one could download, it doesn't even have to be VAT. I imagine US Sales tax would be somewhat similar
19:18:06 <jralls> It's accrual accounting. Go study.
19:18:35 <jralls> A/R and A/P are part and parcel of the same thing.
19:19:32 <jralls> And BTW, this is stuff that can get you in trouble. Hire a licensed local accountant to help you get things set up. It's well worth the money.
19:20:06 <Luk6655> jrals, it's not like I'm basing my returns off this, I have another accouting system that works
19:20:16 <Luk6655> I'm just trying to replicate what it does in gnucash
19:21:08 <jralls> Before you can do that you have to understand what it does. To understand that you have to understand accounting.
19:21:29 <Luk6655> coming back to accrual accounting, just one more question, how does one DR Expense:VAT and CR Liabilities: VAT Owed, when an invoice credits VAT Owed as a split transaction?
19:22:12 <Luk6655> There is no corresponding transaction to record in expenses
19:23:34 <Luk6655> I'm no accountant, I do understand the concepts IMO, I'm just trying to find out how they apply in gnucash
19:23:42 <jralls> The principle there is that VAT isn't an expense to you. You collect it from the customer on behalf of the government.
19:24:13 <Luk6655> you don't have to explain how vat works
19:24:21 <Luk6655> :-)
19:24:47 <jralls> Well, that's the answer to your question about why there isn't an expense split: There's no expense.
19:25:19 <Luk6655> ok, that is interesting
19:27:26 <Luk6655> So you're saying one should record VAT payment simply debiting VAT owed and the asset bank acct you're paying it from, right?
19:27:37 <jralls> Yes.
19:27:48 <Luk6655> ok, that makes sense, thanks
19:30:41 <jralls> The other model is that you book the whole billing amount including the VAT as income and balance the VAT Owed with an expense.
19:31:56 <jralls> That doesn't change the VAT payment transaction, just the sale transaction.
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19:37:11 <jralls> Luk6665, Oh, here's chris. He actually knows about VAT/GST. I've got to go so I'll turn you over to him.
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20:05:35 <chris> https://wiki.gnucash.org/wiki/Quickstart_Australian_BAS is what I do
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