How do I record tax on profit?

How do I record tax on profit?

Taxes on profits can be recorded by creating an expense with Tax Payable as the expense account. To create an expense:

  • Go to the Purchases tab on the left sidebar and select Expenses.
  • Create an expense by clicking + New.
  • Select Tax Payable under Other Current Liability as the Expense Account.
  • Enter the tax amount.

Insight: To get the tax amount, run the Profit & Loss report for the particular period and calculate the tax from the net profit.

  • Select the Paid Through account. This can be the account from which you want the tax to be deducted.
  • Enter all the other necessary details.
  • Click Save.

An expense recording the tax on profit will be created.

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