QuickBooks | How to record the opening balances for GST

Software: Intuit QuickBooks accounting software

You have to bring over the GST payable or receivable balances over to QuickBooks when you crossover from the existing software to the new Intuit QuickBooks accounting software.

Assuming, as of your crossover date the GST output tax payable is at $8,750.00 and the GST input tax receivable is at $3,328.00. This gives you a net GST payable of $5,422.00. You can use a General Journal to record the GST payable amount as of your crossover date.

In the General Journal transaction, the date of the journal will be the crossover date (usually we crossover as at the closing date of the last financial year). You will then record the General Journal entry as:

Line 1: Credit the GST Payable account 8,750.00. You may enter the memo as GST Output (optional). Once the GST Payable account is selected, the tax agent whom was set for this account will be automatically picked up at the Name field (in this case, is IRAS (GST), IRAS (GST) is a vendor name type which we have set it as a Tax Agent). You may also select the Standard rated GST tax item in the Tax Item field (in this case, we are using 7G-S for 7% Standard rated GST output tax).

Line 2: Debit the GST Payable account 3,328.00. This is the GST receivable, which is the GST Input tax. You may select the Standard rated GST Input tax item in the Tax item field (In this case, we use 7G-P for 7% Standard rated GST input tax).

Line 3: Debit the Opening Balance Equity account 5,422.00. The Opening Balance Equity account is being used here to balance up the General Journal. The Opening Balance Equity account is a system account in QuickBooks to capture all the opening balances as of the crossover date.

QuickBooks - GST Opening Balance

Once all the opening balances have recorded, you should perform a “File Tax Return” procedure to complete your GST Cycle as of your crossover date before the payment to your Tax Agent. This process is to clear up your GST payable and receivable from the GST control account in the Balance Sheet and to make payment or receiving the GST outstanding to or from the Tax Agent.

Select the Tax Agency Detail Report from the Sales Tax menu to begin your “File Tax Return” procedure. Change the date range of the Tax Agency Detail Report to view the GST outstanding as of the crossover date. You will see the GST Output payable, which you have recorded in the earlier General Journal, at the Tax on Sales section and the GST Input receivable at the Tax on Purchases section. Next, click the “File Tax Return” button and follow the wizard to complete the File Tax Return procedure in QuickBooks.

QuickBooks - File Tax Return

At the end of the File Tax Return process, you have an option to Pay Now or Pay Later, if you select the Pay Later option, then QuickBooks will create a journal and transfer the outstanding to the Tax Agent payable account, you will then do a Pay Bill to pay off the outstanding Tax. Hence, if you are supposed to receive the Tax Refund, then QuickBooks will transfer it to the Tax Agent receivable account which you need to make a Receive Payment to receive the payment from Tax Agent.

Note: QuickBooks does not automatically file tax returns with IRAS, you have to manually fill up the GST Form 5 at the IRAS website.