I bought something from one of my suppliers, for business use. He neglected to charge me sales tax on it, and said I should just put it in as Use Tax. How do I do that?
Use Tax?
May 30, 2007
4 Replies
Enter the use tax on your quarterly sales tax return.
I created several accounts to track these items. Office Supplies Expense NT (for not taxed), Shop Supplies Expense NT and so forth. At sales tax payment time, I run a report on all expenses which were not taxed, then adjust the sales tax due and charge the amount of the tax to Use Tax Expense. Unfortunately, my State makes me report personal sales taxes due on the same form as business sales taxes so I also have to pay the use tax for personal items by taking the money from the Owner's Equity account instead of charging it off as a business expense. All financial advisers say not to mix personal and business things and then the State makes me do it. Go figure.
Bob
Yes, create a Use Tax Payable. On your invoice post it as follows for an item you paid 100 for with 5% sales tax:
Debit Expense 105 Credit Use Tax Payable 5 Credit Cash 100
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