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I am trying to set up quickbooks for my business. Would I classify penalties as an expense or current liability? these are penalties for filing sales tax return late. I set it up under expense but am unsure if that is correct. I hate to make an appointment with my $65/hour accountant just for this.

2007-02-28 08:03:19 · 4 answers · asked by Anonymous in Business & Finance Other - Business & Finance

4 answers

Penalties are an expense.

You may have to use a liability if you haven't paid them yet but using accounts payable is fine.

$65 per hour? Count yourself as lucky. As an accountant I would think you could call them, as my clients do, and ask a simple question. No charge. Unless it takes a significant amount of time, which I would tell them I think it will take, I get my fees when I do real work, not just answer a question.

As for taxes, they are not deductible so having them in a separate expense account is ideal for the accountant who prepares your taxes.

2007-02-28 08:12:39 · answer #1 · answered by Nusha 5 · 0 0

Penalty is an expense. Once you paid it, you no longer owe it. A liability is something that you owe and have not paid yet. If your business is on cash base then the only liabilities you will have are unpaid bills, loans etc.
Set up the tax penalty the same way the taxes are setup.

2007-02-28 08:15:08 · answer #2 · answered by Alexander K 3 · 0 0

Getting an installment plan should not be confusing. Getting the interest and consequences bumped off is unlikely. it really is conceivable to do some thing observed as an grant in Compromise that would decrease down what you owe, yet it really is fantastically complicated so that you will be sensible to artwork with a CPA or enrolled agent in case you commit to attempt that - and extremely few such grants get approved.

2016-12-05 01:55:21 · answer #3 · answered by ? 4 · 0 0

Penalties aren't deductable

Taxes you paid are deductable.

So, you have it wrong

2007-02-28 08:07:54 · answer #4 · answered by Anonymous · 0 0

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