The 2 tax rates created prior to the Group rate creation must be clicked to Inactive. Otherwise you risk conflicts between the individual tax rates and the group rate if an incorrect rate is selected. This could cause a mess in reporting
I did not realize we can make the 2 sub-rates inactive, and still use the group rate!!! It always bothered me that they still showed up on the dropdown, knowing that they could cause confusion!!! I'm so glad you commented!!! Thank you!!! Pinning your comment for everyone to know and see!
If you are adding the 50% non-claimable HST amount back to the original meal expense account will you not then overestimate the 50% meal & entertainment expenses amount at the end of the year that you can claim?
Great Question! The way I approach this is; when there is non-refundable taxes, such as PST, RST, Fuel tax, or GST/HST for small suppliers not registered for GST/HST or simply exempt suppliers such as daycares etc, we treat the tax as expense in the bookkeeping, increasing the expense GL it is charged on. I am treating the non-claimable portion of the GST/HST on meals in the same way. This amount will also get divided in half at income tax time, as meals expenses are only claimable at 50% when calculating the taxable profit. We're talking about half of half of the HST on the meals. It's not a 'big fish' that CRA has zoomed in on during any Audit or Review I have worked on. Usually the issue is that a business is claiming meals expense on meals that are 100% not eligible, and THAT's the main focus that I find CRA really is concerned about during audits and reviews.
@@NaomiWilkins I have one more question. The business I work for is located in Ontario Canada. The owner attended a week long convention in BC and paid for air flights, meals, and car rentals while out west. How do I record the meal expenses in quickbooks online? Do I take 50% of GST?
Thanks you, it workes the second time. Question, basic accoutning when 50% rate is used the other portion of hst increases the expense to $10.65 where with reagular rate the expense is $10. Is this right ?
I operate as a Sole proprietor, so for a lot of my expenses I can only claim a relative %. For example, my vehicle expenses come down to the percentage of Km's used for work Vs personal, and the same with my phone or internet use, etc. In these cases, for fast and accurate ITC tracking in QBO, would you set up a similar TAX group for each expense account that I can't claim the total HST % amount for? It's a bit of work, but then I can quickly look at my Tax summery for the year when it comes time to File HST. Is there a down side to this that you can think of? Also, thanks for the vids! Very helpful. :)
Thanks for this great comment! For most SMBs (Small & Medium Businesses) in Canada, I would suggest not having personal expenses or transactions mixed into the bookkeeping. BUT! Self-Employed, non-incorporated service providers... our bookkeeping is slightly different. As you note, there are a few categories of expenses that are pro-rated at the end of the year... so what are our options for calculating HST? I think your suggestion is a great one! In fact, I actually do that for my OWN bookkeeping! I have a "Vehicle Sales Tax Rate" and a "Mixed Use Sales Tax Rate". The issue I can see with the Vehicle rate is that it can change from year to year. But mine was fairly consistent till COVID hit. That year I needed to reduce it quite a bit. Otherwise, I haven't come across any issues with using this method myself so far! Thanks again for this great insight!
Hi There! Tips can go on a second line within the QBO expense entry, put to the same meals expense GL account, but out of scope of sales tax, as there is no sales tax on tips. Thanks for your question!
I am trying to set up the meals and entertainment as you show on this you tube, but I don not have a non-tracking choice, I have rebates, adjustments on purchases and input tax credits. Do I choose adjustments on purchases
Hi there! I haven't seen those options on the QBO files I work with. Are you in the "Add Custom Rate" section? Are you adding a custom rate to HST/GST, or perhaps a provincial tax?
thanks so much. this is great! What about the tips we pay on a meal. I have been putting them on a separate line in the entry with out of scope for tax. I set up 'tip' under expenses. will that work?
I enter the tips the same way because it's quicker (on a second line out of scope), but, there is no reason to have a separate GL Account for Tips... it's part of the meals cost, and just goes to meals :D
Very useful video ! but I have a question. why do we need to create the non claimable tax rate? and later grouping it? instead, why don't we only use the claimable tax rate to meals expenses? can you explain?
Because businesses can only claim 50% of the expense and associated GST/HST on meals expenses. So, only half of the HST is claimable, the rest is not. And at tax time, the tax preparer only claims half of the meals expense total on the tax return. Hope this helps!
Very helpful. Is it possible to set up a non-tracking GST on sales? I record sales based on bank deposits, but also issue invoices for customers. That invoice has to have GST showing, but it will be duplicated with deposits.
Sorry I missed your comment! I just saw this now! GST is not duplicated on deposits, if it is for you, then you are entering the deposits incorrectly. You need to either enter client payments as deposited directly to the bank and match them in the bank feed, or mark the payment as deposited to "Undeposited Funds" and then selecting that cheque to be deposited on the deposit screen. This confusion is the number one issue I see with QBO, and you've inspired me to make it my next video!!! Thank you for your comment!
That's a BIG assumption! I have found that generally accountants do NOT do this at year end... If you have one that does, then that's great! Always ask though, I would never assume this to be the case.
The 2 tax rates created prior to the Group rate creation must be clicked to Inactive. Otherwise you risk conflicts between the individual tax rates and the group rate if an incorrect rate is selected. This could cause a mess in reporting
I did not realize we can make the 2 sub-rates inactive, and still use the group rate!!! It always bothered me that they still showed up on the dropdown, knowing that they could cause confusion!!! I'm so glad you commented!!! Thank you!!! Pinning your comment for everyone to know and see!
I think you are the best bookkeeper on you tube - Explaining things really well.
Thank you so much for this comment! It made my day!! :D
wow, it makes things much easier, thank you for sharing
I'm so glad you found this helpful!
Thanks for the very easy-to-follow and understand video on setting up 50% GST group!! I look forward to watching more of your videos!
I'm glad you found it helpful! Thanks for your comment!
I love your tutorials! You share all of your knowledge, I watched them all and learned a lot. Thank you so much!
I'm so glad you found them helpful!
This was very helpful, thanks!
Thank you so much for the positive feedback!
This came in clutch today, thank you so much!
I'm so glad you found it helpful!
Thanks. Great explanation.
I'm so glad you found this helpful!
Excellent video - was a real help!
Thanks so much for your comment! I'm glad you found this video helpful!
If you are adding the 50% non-claimable HST amount back to the original meal expense account will you not then overestimate the 50% meal & entertainment expenses amount at the end of the year that you can claim?
Great Question!
The way I approach this is; when there is non-refundable taxes, such as PST, RST, Fuel tax, or GST/HST for small suppliers not registered for GST/HST or simply exempt suppliers such as daycares etc, we treat the tax as expense in the bookkeeping, increasing the expense GL it is charged on. I am treating the non-claimable portion of the GST/HST on meals in the same way. This amount will also get divided in half at income tax time, as meals expenses are only claimable at 50% when calculating the taxable profit. We're talking about half of half of the HST on the meals. It's not a 'big fish' that CRA has zoomed in on during any Audit or Review I have worked on. Usually the issue is that a business is claiming meals expense on meals that are 100% not eligible, and THAT's the main focus that I find CRA really is concerned about during audits and reviews.
Thank you so much for the response@@NaomiWilkins
@@NaomiWilkins I have one more question. The business I work for is located in Ontario Canada. The owner attended a week long convention in BC and paid for air flights, meals, and car rentals while out west. How do I record the meal expenses in quickbooks online? Do I take 50% of GST?
Thanks you, it workes the second time.
Question, basic accoutning when 50% rate is used the other portion of hst increases the expense to $10.65 where with reagular rate the expense is $10. Is this right ?
In this set up, yes, that is what is happening. :)
This is incredibly helpful! You're awesome.
I'm so glad you found this helpful! Thanks for the uplifting comment! :D
Thank you! was really helpful
I'm so glad you found it helpful! :D
I operate as a Sole proprietor, so for a lot of my expenses I can only claim a relative %. For example, my vehicle expenses come down to the percentage of Km's used for work Vs personal, and the same with my phone or internet use, etc. In these cases, for fast and accurate ITC tracking in QBO, would you set up a similar TAX group for each expense account that I can't claim the total HST % amount for? It's a bit of work, but then I can quickly look at my Tax summery for the year when it comes time to File HST. Is there a down side to this that you can think of? Also, thanks for the vids! Very helpful. :)
Thanks for this great comment!
For most SMBs (Small & Medium Businesses) in Canada, I would suggest not having personal expenses or transactions mixed into the bookkeeping.
BUT!
Self-Employed, non-incorporated service providers... our bookkeeping is slightly different. As you note, there are a few categories of expenses that are pro-rated at the end of the year... so what are our options for calculating HST?
I think your suggestion is a great one! In fact, I actually do that for my OWN bookkeeping! I have a "Vehicle Sales Tax Rate" and a "Mixed Use Sales Tax Rate". The issue I can see with the Vehicle rate is that it can change from year to year. But mine was fairly consistent till COVID hit. That year I needed to reduce it quite a bit.
Otherwise, I haven't come across any issues with using this method myself so far!
Thanks again for this great insight!
Thanks for your reply! @@NaomiWilkins
How about the tips of the meals. How should we enter? Is it possible to provide an example.
Hi There! Tips can go on a second line within the QBO expense entry, put to the same meals expense GL account, but out of scope of sales tax, as there is no sales tax on tips. Thanks for your question!
I am trying to set up the meals and entertainment as you show on this you tube, but I don not have a non-tracking choice, I have rebates, adjustments on purchases and input tax credits. Do I choose adjustments on purchases
Hi there! I haven't seen those options on the QBO files I work with. Are you in the "Add Custom Rate" section? Are you adding a custom rate to HST/GST, or perhaps a provincial tax?
I actually figured it out, thank you@@NaomiWilkins
thanks so much. this is great! What about the tips we pay on a meal. I have been putting them on a separate line in the entry with out of scope for tax. I set up 'tip' under expenses. will that work?
I enter the tips the same way because it's quicker (on a second line out of scope), but, there is no reason to have a separate GL Account for Tips... it's part of the meals cost, and just goes to meals :D
@@NaomiWilkins wonderful!!! thanks you so very much for your quick reply.
Very useful video ! but I have a question. why do we need to create the non claimable tax rate? and later grouping it? instead, why don't we only use the claimable tax rate to meals expenses? can you explain?
Because businesses can only claim 50% of the expense and associated GST/HST on meals expenses. So, only half of the HST is claimable, the rest is not. And at tax time, the tax preparer only claims half of the meals expense total on the tax return. Hope this helps!
Very helpful. Is it possible to set up a non-tracking GST on sales? I record sales based on bank deposits, but also issue invoices for customers. That invoice has to have GST showing, but it will be duplicated with deposits.
Sorry I missed your comment! I just saw this now! GST is not duplicated on deposits, if it is for you, then you are entering the deposits incorrectly. You need to either enter client payments as deposited directly to the bank and match them in the bank feed, or mark the payment as deposited to "Undeposited Funds" and then selecting that cheque to be deposited on the deposit screen. This confusion is the number one issue I see with QBO, and you've inspired me to make it my next video!!! Thank you for your comment!
Actually, u really don't have to do that because your year-end accountant will do it for year-end filing business tax.
That's a BIG assumption! I have found that generally accountants do NOT do this at year end... If you have one that does, then that's great! Always ask though, I would never assume this to be the case.
I agree with you Naomi!
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