I read this (quoted below) on another forum regarding VAT reconciliation. The post was made in 2010, is this still true today or can Solar Accounts now handle the VAT at the end of each quarter without having to use two accounts for VAT?
"One thing I do recommend when working with VAT on Solar, is to rename the VAT Liability Account to "VAT running account" and create a new account called VAT Liability. Every quarter, do a journal from the running account to the liability account (just like you would in Sage). This will clear the running account down to Zero. This is really important in Solar as it won't do a VAT reconciliation, so it will help highlight if any transactions haven't been picked up on the VAT return (if you check the balance on the running account at the end of last quarter after the journal's been run and it's not zero, you know some other transactions have been posted in the period that will need manually including)."
Hi Vic
We did not give the advice about using a 'VAT Running Account' so we cannot give you details about this approach - you will need to contact the person who suggested this method.
Regards
Hi Mark,
Yes, I know it wasn't you who suggested using two VAT accounts. What I am trying to understand is the reason behind it though. What would it achieve?
Am I correct in thinking that Solar Accounts will tell me exactly how much VAT is due at the end of each quarter and how much paid during the year using just the VAT liability account? Why overcomplicate things with two accounts, or am I missing the point?
Hi Vic,
I have to admit I don't understand the reasons for having two separate liability accounts. Personally I think it's easier to reconcile a single VAT liability account.
Regards
The two accounts and zeroing the "running Account" at the end of a quarter would be useful in identifying postings dated in the "closed" period but entered after the VAT return has been finalised. To check if any such posting have been made prior to finalising the subsequent quarter one would need to run an "account activity" report as at the date of the last VAT return completed.
