In the previous blog, we have seen how to Receive Payments from Customer Invoices. What if your customer has a payment term discount, such as 1% Net 30, 2% Net 30, etc., how to apply this in the payment?
QuickBooks helps you identifying the discount in the Receive Payments window by first adding the Discount Date column on the right of Original Amount:
Once you sell your products &/or services to your customers and send the invoices, the next pleasing chore is receiving the payments. In QuickBooks, you have to apply these payments to respective customer invoices.
First, let’s take a look at how you can set the Payment preference by choosing Edit > Preference and click the Payments icon > Company Preferences tab:
• Automatically apply payments – the system will automatically apply the amount you enter as a payment to any matching invoices; when there is no matching invoices, it will apply to the oldest invoice.
• Automatically calculate payments – to allow you to select the invoices without entering the amount of payment in the Amount field in the Receive Payment window (which you will see next). The system will add any of the selected invoices as the value in the Amount field.
• Use Undeposited Funds as a default deposit to account automatically – the system will automatically post the payment to Undeposited Funds account, which means you need to make deposit (Banking > Make Deposit) to deposit the payment to your checking account.
Next, open the Receive Payments window from Home Page > Receive Payments or Customers > Receive Payments:
If you are running a business, the British Columbia government will reimplement the PST and GST (5%), replacing the current HST (12%). The PST (Provincial Sales Tax), like the previous PST before HST was implemented, is a retail sales tax applied to taxable goods or services purchased/leased for business or personal use, unless exempted.
The general PST rate of 7% will which apply to:
• Most of the purchase or lease of new or used goods, including home products, adult clothing & footwear, vehicle parts, and electronics.
• Goods brought, sent, or delivered into BC for use in BC
• The purchase of most services to good, such as car maintenance, electronics repair, etc.)
• The use of legal services (other than legal aid)
• The purchase of telecommunication services, including pay-per-view, mobile phone, internet, email service (other than basic cable television service).
The complete list of PST rates are:
If your business deals with multi-currency, you usually have to revalue the foreign currency against the home currency to reflect changes in the exchange rates. For example, if you have AUD Account Receivable balance of $1,006,- on Dec 1 with a rate of 1.0000 CAD, and at the end of Dec the rate changes to 1.0535 CAD, then the change of CAD value because of the AUD rate fluctuation (Unrealized Gain/Loss) will be $53.80,-.
Thus, the foreign currency revaluation is the difference between of exchange rate recorded at the time of transactions and at the time of adjustment, times the carrying balance. In QuickBooks, this foreign exchange revaluation is called Home Currency Adjustment which is calculated on all foreign currency account balances – bank account, credit card, A/R, & A/P.
In Home Currency Adjustment, the Exchange Gain/Loss expense account will be automatically created to balance the (home currency equivalent) of the foreign exchange accounts.
Let’s do Home Currency Adjustment from the example above:
1. Review the Unrealized Gain/Loss report from Report > Company & Financial > Unrealized Gains & Losses. Enter the exchange rates once are prompted with Enter Exchange Rates window. Make sure these rates are the rates you will be using in Home Currency Adjustment window in Step 2.
If you are a solopreneur or only a few employees and don’t want to subscribe to QuickBooks Payroll add-on services, then you can do the payroll manually. This definitely will take more time in setting up chart of accounts and you have to obtain the CPP, EI, & tax tables from Canada Revenue Agency.
CRA website provides Payroll Deductions Online Calculator where you can calculate the payroll deductions before inputting it into QuickBooks.
In the example below, Jacque Hudspet is an employee in Vancouver, BC with $3,000, - monthly salary, with no other taxable benefits or deductions. CPP is calculated at 4.95% ($3,500 exemption) for both company and employee portion. EI for employee is at 1.88%, while EI for company is 1.4 times EI for employee.
To issue a paycheck:
1. Create Salary/Wages Expense under Payroll Expense. Create CPP-Employee, EI-Employee, & Income Tax-Employee liabilities account under Payroll Liability.
2. From the Main Menu > Banking > Write Cheque.
3. In the Expenses tab > Account, select Salary/Wages Expense and enter gross salary/wages.
4. Move to the next row, select CPP-Employee Liability and enter CPP-Employee amount with minus sign.
5. Move to the next row, select EI-Employee Liability and enter EI-Employee amount with minus sign.
6. Move to the next row, select Income Tax-Employee Liability and enter Income Tax-Employee amount with minus sign.
The cheque amount is the net salary amount.