USA Sales Tax when Entering Payables

Nov 14, 2013
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Help please! Sales tax - payables

I just started doing accounts payable for a new company. I do not have a degree but I do have lots of experience. This company has been ran by only two people with no degrees and the way they are doing their accounting is not accurate to my knowledge. Maybe I am wrong, but compared to my last two jobs... things are no consistent. I have always been told that "sales tax" goes into a separate account in payables and in receivables. I have noticed that when entering payables... they have been lumping sales tax into the same expense accounts as the parts we purchased. This seems so wrong. I asked the girl why she does that and she said our accountant told her it is all an expense and to just lump it all together. I would think it would mess up our taxes at the end of the year because we have no way to show how much we have already paid in sales tax. Because some of our vendors don't charge us taxes because we are exempt on some material... I think this makes it even worse. Please help me! Am I wrong? DOes it not matter as much when entering payables? It's driving me crazy because this is now my position and I want to make sure I am doing everything accurately. Thank You!
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VIP Member
Oct 12, 2011
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United States
My company also lumps it together as its all a deductible expense at the corporate rate. Preferably, it could be split but doesnt seem to make a difference. Where it does matter is when we capitalize the asset, sales tax is part of the cost and should be included - so its easier to lump together when determining teh capitalization amount.

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