How do Taxes on my Expenses work?
FreshBooks makes it easy to keep track of your spending with Expenses. This is helpful if you are required to document business-related purchases for your business and for tax deductions.
When creating an Expense with a tax on it, the system will automatically calculate taxes for you based on the total amount you paid. Steps for this are as follows:
- Create the Expense using the New Expense button, or the edit link for an existing Expense
- In the Amount field, enter the full amount paid including taxes
- If you paid tax on this item, check off the Taxes box and choose from the drop-down menu a tax that was paid
- The system will back-calculate the value you paid in tax for that Expense
Here’s a sample tax situation:
You paid $113.00 in gas (including tax) while driving around the city being awesome for your company.
- Enter $113 into the first required Amount
- Choose a Tax. In this case it is HST = 13%.
- The system will calculate that you paid $13.00 in Tax to make the total $113.
- Taxes you paid on Expenses are included in your Tax Summary