If your accountant has put the wrong information or figures in the tax document and you sign the document without fully understanding the figures, you are accepting full legal responsibility for any mistakes that may have been made by your accountant.
Do accountants handle sales tax?
Therefore, if your small business sells tangible personal property, you should employ an accountant with expertise in reporting sales and use taxes.
Do accountants have a duty of care?
An accountant will almost always owe a duty of care to his or her own client, but that duty is likely to be coextensive with his or her contractual duty. As a result, practitioners preparing financial reports on members of regulatory bodies, for example the Law Society, will owe a duty of care to such bodies.
How often should you meet with your accountant?
about twice per year
Ideally you are meeting with your accountant about twice per year, once in January or February and once in March or April. The first meeting gives you a chance to learn about any updates to tax laws that may have been passed in the last year.
What do you need to know about sales tax accounting?
If a seller charges you sales tax, you must record the sales tax expense in your books. Sales tax accounting is the process of creating journal entries to record sales tax you collect and pay.
What happens when you collect sales tax from a customer?
When you collect sales tax from customers, you increase the corresponding liability account, which is your Sales Tax Payable account. And because you collect the sales tax, you also must increase your Cash account. Your Cash account is increased by debits.
How to record sales revenue before sales tax?
In total, you must collect $5,250 from your customer. Record both your sales revenue of $5,000 and your sales tax liability of $250 in your accounting books. To do so, debit your cash account for the total amount the customer paid you. Then, credit your Sales Revenue account the amount of the purchase before sales tax.
How are journal entries used in sales tax accounting?
In this section of sales tax accounting, we will use a fictitious company to provide examples of journal entries to record sales, collected sales taxes, and remitted sales taxes. These journal entries can be used in a manual accounting system and also in a computerized accounting system such as QuickBooks.
