Before entering the accounting transactions with VAT, the VAT accounts need to be entered in the Chart of accounts (our advice is to use an Automatic VAT account) and to update the File and Accounting properties, VAT/Sales tax Tab with the Automatic VAT account or the traditional VAT accounts (Recoverable VAT and VAT due).
In the VAT codes table, there are codes both for the sales and the purchases. When entering the transactions, use the appropriate VAT code.
The software automatically splits the VAT amounts and records them in the Automatic VAT account or in the VAT account that has been indicated by the user in the File and Accounting properties.
Automatic VAT account
As an alternative to the traditional system with several VAT accounts (Recoverable VAT, VAT due, VAT Revenue authority, VAT to be paid), it is possible to only have two accounts in the Chart of accounts: the Automatic VAT account and the account VAT to be paid.
The Automatic VAT account, already configured in the Charts of Accounts of Banana Accounting, is already set up as the default account in the File and Accounting properties of the File menu. If, on the contrary, this account is not configured as the default account in the File and accounting properties, then the account should be indicated in the VAT Codes table, in the VAT account column.
The program automatically transfers all the amounts, calculated according to the VAT codes that have been inserted in the VAT Codes table:
- In debit, the recoverable VAT amounts are present
- In credit, the due VAT amounts are present
- In the last row, Balance column, the VAT amount that needs to be paid to the State can be found. This amount needs to correspond with the amount displayed in the VAT report. If this is not the case, then there are errors in the accounting.
Carrying the VAT account to zero at the end of a period
At the end of every quarter (or period), the balance of the Automatic VAT account can be transferred to the VAT to be paid account.
The VAT to be paid account will have zero as a balance at the moment the VAT is being paid.
With this system it is possible to check the balance every quarter; in case of an error, it is easy to locate in which period the balance no longer corresponds.