We’ve made some major changes to how sales taxes are handled in Wave to simplify the process of reporting and remitting sales taxes.
All sales tax reporting in Wave starts with creating a sales tax.
To create a sales tax in Wave:
- Click on Settings and select Sales Taxes
- Select Add a Sales Tax
- Fill out any required fields and click Save
Once a sales tax is added, a liability account will be automatically created for it in your Chart of Accounts page.
Before the update, sales taxes were accounted for in two separate accounts: Sales Tax Payable (a liability account) and Sales Tax Receivable (an asset account). These two accounts have been consolidated into a single liability account under the name of the sales tax.
As soon as you apply a sales tax to any transaction, invoice, or bill in Wave, the tax will appear as a line item in all of your reports with the exception of your Profit & Loss Statement, Payroll Wage & Tax Report, and Aged Receivables Report.
With the introduction of the Cash Flow Statement, you can now easily report and remit sales taxes on a cash-basis. To do so, generate a statement for the period in question and click on Details. Scroll down to the Sales Taxes header to find any relevant sales tax amounts for the period.
Any owing taxes will appear as a positive number, where any sales taxes that you are owed as a refund will appear as a negative. Subtracting the negative number from the positive will give you the total amount owed to the government for the period.
That's it! You now know everything there is to know about the updates to how Wave handles sales taxes.
To record sales tax returns and payments in your Transactions page, follow these instructions.