Hawaii General Excise Tax

[Ken Schultz]

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

 

[Allan Martin]

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

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

 

[Ken Schultz]

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

 

[Allan Martin]

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.

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.

 

[Ken Schultz]

Thanks Allan

I appreciate your quick responses

best regards
ken

 

[hiusio]

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?