When limited companies make a profit in an accounting year, corporation tax will be due. This guide shows how to record the Corporation tax charge in Clear Books.
Please Note: A corporation tax estimate can be viewed on the Dashboard by enabling the Tax & dividends widget or on the profit and loss report via Reports > Popular reports > Profit & loss.
The estimate is determined by the current accounting year (Settings>Periods). The estimate does not take into account the current tax year. The estimate also does not take into account any non-taxable income or non-deductible expenditure.
Navigate to the Tools > Journals menu.
Click on the Create Journal button.
Complete the boxes debiting the corporation tax account (in the Tax expense group of the Profit & Loss account) and crediting the corporation tax account (in the current liabilities group of the Balance sheet) and save. This takes the tax out of profits and shows it as being owed to the government.
Navigate to the Purchases > Bills menu.
Click on the Create bill button.
Fill in the details of the bill using the corporation tax account (in the current liabilities group).
Please note: If the corporation tax account does not appear in the Account drop-down list, head to Settings > Accounting > Account codes and make sure the show in purchases checkbox is ticked for the corporation tax account (in the current liabilities group).
Alternatively, you can skip creating a bill and explain the payment directly from an imported statement. When the tax is paid to HMRC explain it on the bank statement by putting the payment to the corporation tax account (in the current liabilities group). This will debit that account, thus paying off the liability.