Category Archives: QuickBooks Asia

Change of GST rate in QuickBooks Desktop from 7% to 8%

Singapore’s GST rate has scheduled to increase from 7% to 8% from 1 January 2023.

References:
IRAS | Overview of GST Rate Change

QuickBooks Desktop is an accounting software installed on the computer desktop (Windows) following US, UK or Canadian tax; therefore, it is likely that it will not get any patches to update when there is a change in the Singapore GST rate. Although you are not getting an auto-update on the tax rate, no worries; changing the tax rate in QuickBooks Desktop is not too complicated.

Edit or add new?

Yes, editing the tax rate of the existing tax item is possible, which requires less effort, but adding a new set of 8% GST items to your QuickBooks Desktop file is preferred.

Why?

During the transition period, you may require using the 7% for some transactions instead of the new 8%; therefore, adding a new GST item with the new rate may be a better option than changing the GST rate of the existing GST item from 7% to 8%.

Besides, QuickBooks does not have a “posting” feature that permanently “locks” the transactions. It will update to the new rate if the user has accidentally amended past transactions. For example, a salesperson may amend and reprint an invoice when the product or quantity entered was incorrect or changed, and the invoice gets updated with the new rate when saved.

You, as an administrator, decide whether to edit or add a set of GST codes and items to QuickBooks Desktop. Below are steps to recap how to set up a new rate in QuickBooks if you opt for the latter.

Set up GST code and GST items

You need to select the appropriate GST code when entering a transaction (e.g. Sales Invoice or Bill), and the GST amount calculates based on the rate set in the GST item, which links to the GST code used. The GST amount (either input or output GST) will then tag to the Tax Agency (e.g. Comptroller of Goods and Services Tax or IRAS) for printing the GST report and update the appropriate GST ledger.

Transaction > GST Code > GST item (with GST rate) > Tax Agency > GST Reports/GST Ledger.

You should have the tax agency and GST ledger account set up in QuickBooks if you are already a GST-registered trader. You only need to add the new GST code and items and link it to the existing tax agency.

The GST item (Sales Tax Item) is in the QuickBooks item list, which you can find under the lists menu. Below is an example of how to set up a GST item for the input tax.

GST input tax:
Sales Tax Name: 8P (you can have a different tax name)
Description: 8% GST input tax
Tax Rate (%) or Amt: 8.0% (you need to have the % symbol; if not, it will be 8.0 dollars)
Tax Agency: Comptroller of Goods and Services Tax
Sales Tax Return Line: Tax on Purchases

8% GST

I am using “8P” as the GST item code for input tax in the above example (your item code may differ from mine). Link the Sales Tax Return Line to the Tax on Purchases to show the tax amount in the Tax on Purchases section (input GST) of the Tax Detail Report. Save the GST input tax item and add a GST output item for the 8% to the list.

Next, link the two newly created GST items to the GST code. The GST code list, which is the Sales Tax Code list in QuickBooks, is under the lists menu. In the below example, I am using “8” as the GST code and linking to the “8P” and “8S” tax items, which are my input and output tax items.

new 8% GST

That’s it. You can now use the new GST code in the transaction.

Update products and name list

The items (and maybe also the customers and suppliers) are in the old 7% GST rate, which requires updating. Manually change them if you do not have many, or use the “add/edit multiple list entry” feature in QuickBooks to edit the tax code. Consider using a third-party importing and exporting add-on tool (such as Transaction Pro) if you have a complex requirement.

BACKUP before importing data into the QuickBooks file! And do database maintenance after importing data.

Amend templates

You do not need to change the formula in the template (e.g. Sales Invoice or Purchase Order form), but if you had hard-coded field labels such as “GST @ 7%” after the subtotal field or in the memo, you need to update them. Consider having a new set of templates for 8% rated GST instead, in case you need to reprint the invoices.

Don’t forget to save a backup of the QuickBooks file before changes. Engage a QuickBooks consultant to help make the necessary changes if you are unsure or have no time.

Reckon Accounts

(for Reckon Accounts users)

Reckon Accounts (formerly known as QuickBooks Australian version or QuickBooks Asia version) follow the Australian tax system. Setting up a new tax rate is slightly different from Intuit QuickBooks, but the relationship between the tax code, tax items, tax agency, and the tax ledger account is similar. You may engage a Reckon Accounts consultant to help make the necessary tax changes if required.

What’s your budget?

Happy new year!

We wish you all have a great 2022.

After being disrupted by the COVID pandemic for two years, it’s time to regroup and plan for your next move.

The world ahead of 2022 could be bright and sunny.
It is a recovery phase for many businesses.
But, are you ready?

Will your customer come back after this pandemic?
Will the operational costs increase?
Do you need to cut back on expenses?
Or increase the marketing spending?
Any change in the product line?
Do your customer still need your product?
Or is it better to switch business models?

The pandemic has changed how a business operates.
Consumer buying behaviour has changed.
Goods may no longer supply the way they used to be.

Being a small business, you may have to change to meet the changes.
Do you have sufficient financial muscle to change?
What should be a realistic projected sales revenue?
What is the new operational cost?
You need a budget.

The business costs changed when the business environment changed. The cost changes can be range from distribution, marketing, direct cost, finance cost, etc. With an appropriate cost allocation (fixed and variable) and desired margin to achieve, you derive a realistic sales revenue and input the budget into the accounting system.

Create a budget in the accounting system

Most of the budgeting feature in a small business accounting system is simple to operate. Budgeting is usually a wizard or form-based, easy for an accountant to follow and create.

QuickBooks Online (QBO)


Click on the Gear icon and select Budgeting from the list. Then, click on the Add Budget button from the budget list to start a budget.

QuickBooks Online (QBO) budgeting

Follow the budgeting wizard, enter the name (e.g. Budget 2022) and select the date range, budget interval (monthly, quarterly or yearly), building the budget from scratch or based on last year’s actual data, etc. Finally, enter the budget figure into the appropriate budget cell.

You may “alter” the budget from time to time to reflect a more realistic goal or create a new budget if the actual has deviated too much from the ideal, and print a Budget vs Actual report to compare your budget against the actual performance.

QuickBooks Online Budget vs Actual report

QuickBooks Desktop and Reckon Accounts Desktop

Reckon Accounts (formerly known as Reckon QuickBooks) has a similar feature and program layout as Intuit QuickBooks.

If using Intuit QuickBooks Desktop or Reckon Accounts, go to the Company menu, Planning and Budgeting sub-menu, and select Setup Budget.

QuickBooks Budget

Click on the New Budget button from the budget list page to create a new budget. Then, follow the wizard to set up the budget year, budget for Profit & Loss, or Balance Sheet, any additional criteria for the budget, etc.

Besides copying the budget figure across the months, you can adjust the row amount based on a percentage increase or decrease in QuickBooks Desktop (or Reckon Accounts).

QuickBooks and Reckon Account budget

Then, measure the performance with the Budget vs Actual report.

MoneyWorks

MoneyWorks’ budget feature is under the Show menu. It provides a list of accounts (both Balance Sheet and Profit & Loss account) and the sub-ledger if you have switched on the departmental accounting.

MoneyWorks budget

Enter the budget figure into the cell and filling down, duplicate the data or distribute the value across the months.

MoneyWorks Profit Budget Report

Then, monitor your progress with the Budget Profit report, comparing the budget against the actual.

We don’t plan to fail but often fail to plan

Small businesses are usually more concerned about cash flow and day-to-day operation, but having a budget is extremely important when moving towards a new normal. With limited resources, it is more crucial to monitor the performance in an uncertain market.

Budgeting is like a compass, helping the business navigate, achieve the revenue and costs as planned.

Good luck!
Stay safe and healthy.

QuickBooks Online (QBO) – offset a deposit received

A deposit received is a payment for goods and services which yet to deliver. It’s liabilities. The balances are cumulative presents in the Balance Sheet. It has to offset against the invoice when goods and services have fulfilled at a later stage.

All the balances in the Balance Sheet have to transfer over when the accounting system changed. And that includes the deposit received from various customers.

Let’s assume that you have decided to move your business accounts to the cloud and adopted QuickBooks Online (QBO) accounting system.

You can use the general journal to transfer the balances from the Balance Sheet to the QuickBooks Online. Set the date of the journal as the crossover date, and then debit the opening balance equity and credit the deposit received account when transferring the deposits over to the new system.

Receive payment in QuickBooks Online (QBO)

Issue an invoice when goods and services have fulfilled on the following financial year. Then, use a journal to transfer the deposit, which paid by the customer in the previous year, to the receivable account. It reduces the amount owed by the debtor when the journal credits the accounts receivable.

Offset the journal with the outstanding invoice when payment received.

QuickBooks accounting system is easy to use and is suitable for small businesses. Sign up a demo to find out more.