Currently there is no option to track use tax in Zoho Books. But, there is a workaround through which you can achieve this.
You can create a new account named Use Tax under Other Current Liability and later associate it while creating expenses.
Let’s take an example where you have made an expense of $100 on March 1st. The purchase (for which you’ve made the expense) will show up as a $100 transaction in your bank feed. Now, you can automatically match the $100 bank feed entry to the $100 expense entry.
However, on March 31st, you need to pay a 6% state usage tax on that $100 purchase. This means you owe your state $6.00.
To track use tax for this scenario, kindly follow the steps mentioned below:
Create an other current liability account to track use tax,
Record an expense for $100 without applying any tax to it.
Lets say, the use tax of $6 has to be paid to Tax Authority A. Therefore, create a new vendor named Tax Authority A.
Now, in addition to the expense that is created, create a new bill (with vendor as Tax Authority A) to record the use tax amount. Follow the steps to do the same:
Now, to track the amount to be paid to Tax Authority A,
Similarly you can view the bills for any other vendor. Also, when you actually pay the use tax, you can just mark the payment for the corresponding bill.
Now, you will be able to match the expense amount properly with the bank transactions and also you will be able to track the usage tax amount payable to your tax authority.
MTD ready accounting
software for small