Using the Tax System
After you have setup your Tax System it is time to explain how to use the Tax System in practice.
Let us say, that you have a Tax Reporting Period of 1 month and you have to report this per the 15th of the following month.
Then you will run The Tax Report somewhere between the 1st and the 15th of the following month.
Let us say that you have to report the Tax on Feb, 15. You run a Tax Report, and if you have set the period value and the months back value to 1 in the Company Setup, FA will suggest the period 01/01/2010 to 01/31/2010. Print out this report.
Before we go any further, it is time to consider how the Tax Transaction Details are collected. They are kept inside a table, called tax_trans_details. This table also holds the tax details for all documents and quick entries.
To avoid booking The Payment directly against the Tax Accounts, we should create or use an Accrued Account for our Tax collection.
So per 01/31/2010 we would enter a JE where we empty the Tax Accounts and counter book them on the Accrued Tax Account.
Now, when you pay the Tax via Bank Payment, you debit this Accrued Tax Account and your bank account is credited.
If you should have a Tax collect, you would of course use the Bank Deposit instead, and book the other way round.
So you see, it is mandatory to use an accrued Tax Account, if you pay later than the Reporting Period. If you pay later using the Tax Accounts directly, you will destroy the Tax Information for the next period (month).
Next period (month), when you run the next Tax Report, FA will suggest the period from 02/01/2010 to 02/28/2010 and the transactions from January (where you emptied the tax accounts) are NOT included in the report.