Tax Accounting Overview

To ensure compliance with local tax reporting, use the Tax Setup page to define basic tax information in Business Central. The page guides you through settings such as choosing the proper group code for non-taxable sales and the default accounts for posting calculated tax.

Set up taxes

Select the Search icon, enter Tax Setup, then choose the related link. On the Tax Setup page, fill in the fields. Hover over a field to read a short description. On the Default Accounts FastTab, specify the general ledger (G/L) accounts to use for posting calculated tax on different transactions.

Tax athorities setup and Tax Payments

You need to create vendor cards for tax and other government authorities in order to have vendor ledger entries and to make payments via payment journal.

The "Vendor type" field shall be set as "Tax authority" for such vendors. This will help with filtering by vendor type.

You can create separate vendors for each tax type. If GL account for each tax type is set as separate account, then you need to create separate Vendor Posting Group for each Vendor type including appropriate Payables GL account.

Tax payments are made via Payment Journal. Select correct vendor on Payment Journal line, other related fields will be filled in automatically based on Vendor Posting Group setup.

Upon posting Payment Journal line, General Ledger Entries and General Ledger Correspondence entries are created.