Sales Tax Liability Payment date

USA Discussion in 'General Accountancy Discussion' started by ADDISION, Apr 13, 2018.

  1. ADDISION

    ADDISION

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    I think I may be doing something wrong.

    For my sales tax liability I create an invoice to the taxing authority for the amount of sales tax collected in the previous month. What date should I be using on my purchase invoice?

    Sales tax collected for 03/01-03/31
    Sales tax return filed on 04/30
    Invoice created and dated on 04/30

    But should I be using a 03/31 date for the invoice?
     
    ADDISION, Apr 13, 2018
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  2. ADDISION

    Steve-LevelUp VIP Member

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    If this is your method for recording sales taxes, then you would record the invoice as of 3/31 (with a payment date of 4/30)
     
    Steve-LevelUp, Apr 15, 2018
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  3. ADDISION

    ADDISION

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    Is making a journal entry the preferred method to record sales tax liability payments? Would I use the 03/31 date for the journal entry or the 04/30 date?
     
    ADDISION, Apr 16, 2018
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  4. ADDISION

    Steve-LevelUp VIP Member

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    Making a journal entry is not the preferred method. The entry should be as follows.

    Dr. AR $110
    Cr Revenue $100
    Cr. Tax Liability $10

    This would be booked on the date the invoice was issued.

    If you issued 100 invoices identical to the above over the course of the month, then when taxes are due, you would calculate the balance of the Tax Liability and remit the correct balance by the due date.

    I hope that helps.
     
    Steve-LevelUp, Apr 18, 2018
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