Record Corporation Tax in your accounts
Help Article
How to record Corporation Tax in your accounts
Links
Steps
1. Navigate to bills
2. Create a new bill with HMRC details
3. Confirm invoice
4. Perform a Bank Import
5. Match Up HMRC with payment for Corporation Tax
6. Click create transactions
If you run a limited company, and the company makes a profit in its accounting year then you will probably need to pay some corporation tax for that year. Your accountant should calculate for you how much tax is due, and in this blog post I will show the best way to record the Corporation tax charge and any subsequent payment in Clear Books.
Let’s assume our company is called Hyper Global Meganet, and that the company’s accounting year runs from the 1st of January (01/01) until the 31st of December (31/12).
Entering the Corporation Tax Charge
Firstly, at year end you will want to accrue the tax charge into the profit & loss account for relevant year. The easiest way to do this is to set up a purchase invoice.
Step 1.
Navigate to Purchases > Bills in the top menu.
Step 2.
Select “HMRC” as the supplier.
Enter a brief description in the summary along the lines of “Corporation Tax charge for year ending 31/12/2009″
Date: This is important – make sure you enter the last day of your company’s accounting year, so in this case it will be 31/12/2009.
In the first line item, write:
Details: “Corporation Tax”
Quantity: 1
Unit Price : Enter the amount of corporation tax your accountant has calculated
Select Account: Tax Expense – Corporation Tax
VAT: No VAT
Creating A Purchase Invoice For HMRC
Step 3.
Check through everything you have entered, and then click Confirm Invoice to save the invoice.
The corporation tax charge will then be entered as an unpaid purchase invoice. When you have paid the tax, and it shows up on your bank import you can complete the next step.
Entering the Corporation Tax Payment
Step 4.
When you have paid the corporation tax charge it should then appear on one of your bank statements. You will need to explain it using the Bank Import Tool.
Step 5.
To allocate the money:
Select HMRC from the To: box.
The unpaid corporation tax purchase invoice should automatically appear in the invoice list that pops up.
Click Allocate button to allocate all the payment to this invoice.
Allocate Corporation Tax
Step 6.
Click Create Transactions.
You should now have correctly accounted for your corporation tax.