This video covers how to enter depreciation and corporation tax before consolidating your financial year and entering the transaction for the tax payment itself.
Read the transcript
Each financial period should be consolidated in Easy Books before moving on to the next period. When you create a business in Easy books, it defaults the date of your next consolidation to the 31st March. You should edit this date in Business Settings to match the year end date of the earliest period you are entering data for.
In this video we're working on the first financial period which ends on the 31st March 2012.
Your accountant will normally handle your tax calculation for you using the figures from your Profit and Loss and Balance Sheet reports. He or she will probably also supply figures for depreciation and handle any capital allowances.
If you're running a small business you could enter your depreciation figure as a new transaction dated on the last day of your financial year. Either add splits to the transaction to depreciate other asset accounts or enter them as separate transactions. Next enter the figure for your corporation tax. This is a transaction affecting your "Profit and loss" account and your "Corporation tax" account.
Once you've entered these end of year transactions, run the Profit and Loss report again and use the Consolidate option. This resets all your income and expense accounts to zero for the start of the new financial year, moving the overall profit into your "Profit and loss" account, which should now show a positive balance. My preference is to move this amount into the "Retained profit" account by adding a new transaction dated on the first day of the financial year.
To enter the actual payment of tax, add a new transaction from your bank account. Set the date to match the date your payment was made and set Account 2 as the "Corporation tax" account. If you're paying the whole tax bill for the year you should expect to see the balance on your "Corporation tax" account return to zero.
Consolidating the financial year in Easy Books locks the period to prevent changes in that period and the Profit and Loss report shows the next period automatically.
What if you need to go back and make a change? You can undo a previous consolidation quickly and easily from the Profit and Loss report, just tap Undo Last Consolidate. You can make any changes you need to and consolidate again later.