Hawaii General Excise Tax

The General Excise Tax in Hawaii is not a Sales tax, it is a tax on the
business and is a tax (4%) on the total price charged to the customer
(effectively a form of Income tax). I can't use the Sales tax feature of SBA
as it's not appropriate and will not be taxed. Typically businesses pass on
the cost to customers by adding a 4.166% charge to the item price (which
equates to 4% of Total).

How can I add a custom item that calculates 4.166% of the total of previous
items in the Invoice and then adds it to an expense Account set aside for
collecting General Excise tax?

I presume I can add and Account item (sending it to the relevant Expense
Account) but how do I make the Unit Price or Line Total a percentage of the
rest of the Invoice?

If there is some way of doing this I would appreciate a reply

Thanks
Ken

 

There is no feature in SBA that will do this. Visibly passing on the
general excise tax to customers is however not required.

 

Thanks for your quick response Allan.

It would be easier not showing taxes on the invoices but is there a way I
can split the earnings ("behind the scenes") from the Invoice into different
Income accounts based on a percentage of a sale?

Having sales split into a basic Income account (96%) and a General Excise
Tax Account (4%) of sale would make it easier to see what i owe in taxes and
pay the amount when due.

Thanks
ken

 

The correct accounting would not involve spliting your income. Income should
be shown at 100%. On a monthly basis or as often as you wish simply make a
journal entry debiting excise tax and crediting excise tax payable equal to
4% of your gross revenues for that period.

 

Thanks Allan

I appreciate your quick responses

best regards
ken

 

hawaii general excise tax query

I was under the impression that the Hawaii General excise tax is a tax on a tax. If my customer pays for services at 4.5% on Oahu, I can charge 0.4712 to the total cost. Ie a product is $100. Customer pays $104.71. I pay the state the general excise tax on my total income which is say I have ten customers, $1047.12 for the month, so I pay 0.45% on the $1047.12 or $47.12 to the state. but of the $100 per customer, $20 is paid to a lab to perform a test, my income is still the $104.71 per customer, and I pay tax on that amount and expense the $20 and not just pay GE tax on the $80. Am I doing this correctly?