Business Personal Property Tax

Annette17Annette17 Member Posts: 10

Would Business Personal Property Tax be an Operating expense or Liability?
For sales tax paid for items resold that we collected the state tax on how / where is it recorded. Texas doesn't send us an invoice, we just calculated it based on our sales.
Thanks !

Comments

  • MikegMikeg Member Posts: 363 ✭✭✭

    Annette17,
    Sounds like your are asking two different questions.
    Business Personal Property tax is an expense of the business. You typically file a return declaring property owned by the business. The state will then send you a bill.
    Sales Tax - If you are paying sales tax on items you purchase for use in the business (i.e. not reselling) then you should pay use tax (self assess) to the state. That payment is an expense.
    Mike G, CPA
    www.mgfinancial.net
    Better Service - Better Pricing

  • Annette17Annette17 Member Posts: 10

    Mikeg
    Sorry I didn't communicate that well.
    1. Business personal property tax - yes we do get a bill and we pay it, just wasn't sure what type of expense to label it as. What category does it fall under on a tax return?

    1. Sales tax. We do resale items at traveling shows and DO collect sales tax from our customers to pay to the state of Texas quarterly. I was trying to determine how to record that in Wave? Journal Entry for the amount we will be sending into the state? Then when we pay it we categorize it was what type of expense?

    Hope that makes more sense. Thanks for the reply

  • MikegMikeg Member Posts: 363 ✭✭✭

    Annette17
    For property tax - Taxes -Other is fine. At least that is the account I create for clients. With regards to sales tax there are two ways you can handle. The simplest way is the expense sales tax remitted provided you are accounting for your cash deposits as sales. For my clients we post sales tax payments either against sales or as an expense. The logic: Since your deposits include sales tax collected you would expense the payment thereby, negating the effect of sales tax. The second way adds a layer of complication for some. If you are using invoicing within Wave and the sales tax function, then I'm assuming it will post the invoice pre-tax to revenue and the sales tax on the invoice to a sales tax payable (liability). When you pay the liability you would crediting cash and debiting sales tax liability. In effect if you walk through that transaction - you've made a sale - collected the amount which includes sales tax- recognized the sale - recognized the liability of sales tax. When you pay the amount, you are reducing your liability. Hope that helps. Coincidentally, I'm working on a group of TX partnerships.

    Mike G, CPA
    www.mgfinancial.net
    Better Service - Better Pricing

  • Annette17Annette17 Member Posts: 10

    Thanks Mike! Makes sense :)

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