Creating Journal Entries with Tax Impact in SuiteTax

Use journal entries to adjust the balances in your general ledger accounts without entering a posting transaction. For information about setting journal entry preferences, see Journal Entry Preferences.

When the SuiteTax feature is enabled in your account, you can specify taxes on journal entry transactions.

Note:

Tax support is available only for book generic journal entries. Book specific journal entries and intercompany journal entries are not yet supported in SuiteTax.

The following tax-related fields are added to journal entries when SuiteTax is enabled:

• Tax Information section:

  • Nexus

  • Subsidiary Tax Reg. Number

• Tax columns on the Lines subtab:

  • Tax Account

  • Tax Code

  • Tax Rate

  • Debit Tax

  • Credit Tax

  • Tax Basis (hidden by default on journal entries)

  • Total Amount

Take note of the following when using the tax columns on journal transactions:

• If you want to specify taxes for a journal line, the following tax fields are mandatory: Tax Account, Tax Code, Tax Rate, and either Debit Tax or Credit Tax. Tax Basis field is optional, and the value for Total Amount is automatically calculated by the system.

• When customizing journal entry forms:

  • You can rearrange the tax columns on the custom form.

  • If you hide any of following tax columns: Tax Account, Tax Code, Tax Rate, Debit Tax, or Credit Tax, you must also hide all the other tax columns on the journal entry custom form. Otherwise, you will not be able to save a journal entry with taxes using that custom form.

    For example, if you hide only the Tax Rate column, all the other tax columns that are shown on the custom form will be redundant. You will not be able to add a journal line with taxes because the system will look for mandatory values, and it will not find a tax rate for the taxable journal line.

  • You can hide the Total Amount column and keep the Tax Basis column hidden, even if the other tax columns are shown on the custom form.

Tax reports are impacted when you use the tax columns on journal transactions. After saving a journal entry with taxes, the tax information that you entered is sent to the tax engine for reporting.

Depending on the implementation, journal entries can be part of reporting on third party tax engines. Check your tax engine implementation to make sure journals are covered in reports.

To create a journal transaction with tax impact:

1. Go to Transactions > Financial > Make Journal Entries.

2. In the Primary Information and Classification sections:

   1. In the Entry No. field, accept the default or enter a different number.

      Note:

      If journal entries are assigned auto-generated numbers in your account, you cannot change the default number unless the override permission is enabled for Journal. To enable this permission, go to Setup > Company > Auto-Generated Numbers. On the Document Numbers subtab, check the Allow Override box on the Journal line. For more information, see Set Auto-Generated Numbers.

   2. Review the Out of Balance By fields as you enter journal lines. They indicate whether the debits and credits in the journal entry balance.

   3. If you use NetSuite OneWorld, in the Subsidiary field, select a subsidiary to associate with the journal entry. The journal posts to this subsidiary and only entities associated with the subsidiary can view the entry.

   4. If you enabled the Multiple Currencies feature, in the Currency field, select the currency used for all amounts in the journal entry.

      • If you use NetSuite OneWorld, the Currency field defaults to the base currency of the selected subsidiary.

      • If you do not use NetSuite OneWorld, the Currency field defaults to the base currency of the company.

      You can accept the default currency or select any other currencies available in your account.

   5. The Exchange Rate field displays the default exchange rate of the selected subsidiary. You can edit the exchange rate for this transaction only.

   6. In the Date field, accept today’s date or enter a new date for the journal entry.

   7. If you use fiscal periods, in the Posting Period field, select the posting period in which to post this transaction.

      Important:

      The posting period is determined when the journal entry is approved. If approval occurs after the selected posting period was closed, the journal entry is posted to the first open period.

   8. Leave the Reversal Date field and Defer Entry box blank, unless you want to create a reversing entry at the same time.

   9. In the Memo field, enter information to help you identify the journal entry in a list of other journal entries.

   10. If you have enabled Departments, Classes, or both features and you classify at the transaction level (as opposed to line level), select the appropriate classification to associate with the journal entry.

3. In the Tax Information section, in the Nexus field, select which nexus you are posting the journal transaction to. This field shows the nexuses (tax registrations) for the selected subsidiary that are valid based on the transaction date of the journal entry.

   When you select a nexus, the corresponding tax registration number is automatically selected in the Subsidiary Tax Reg. Number field. If there is more than one tax registration number for the nexus, the date of the transaction determines the tax registration number to be used based on the validity dates set on the subsidiary record. For more information, see Assigning Tax Registrations to a Subsidiary in SuiteTax.

   When you select a different tax registration number, the corresponding nexus is automatically selected in the Nexus field.

4. On the Lines subtab, enter the information for the journal lines.

   1. In the Account column, select the ledger account to be affected by the journal entry.

   2. Enter the debit or credit amount for the line.

   3. Optionally, enter a memo to help you recognize this entry in a register for this account.

   4. Optionally, select the name of a person, vendor, or company to associate with this entry.

   5. If you have enabled the Departments, Classes, or Locations feature and you specify classifications at the line level, select the appropriate classification to associate with this line.

   6. If you use Revenue Recognition or Amortization features, select the appropriate template in the Schedule column. If needed, enter a start date, end date, and residual amount not to be recognized.

   7. If you want to specify taxes for the journal line, specify values in the following tax columns.

      1. Tax Account – This list is filtered to show only tax accounts associated with the nexus through tax type records. These are the accounts that you set as the Payables Account or Receivables Account on tax type records where the journal transaction nexus is selected on the nexus account line.

      2. Tax Code – This list is filtered to show only tax codes that use the tax type associated with the selected tax account.

      3. Tax Rate – Enter the tax rate for the journal line.

      4. Debit Tax – If you entered a debit amount for the journal line, enter the debit tax amount. The system does not automatically calculate the debit tax amount based on the tax rate and debit amount.

      5. Credit Tax – If you entered a credit amount for the journal line, enter the credit tax amount. The system does not automatically calculate the credit tax amount based on the tax rate and credit amount.

      6. Tax Basis – Optionally, if the debit/credit tax amount is not based on the full debit/credit amount, enter a tax basis for the journal line.

      7. Total Amount – This field shows the total amount for the journal line. The total amount is the sum of the debit/credit amount and debit/credit tax amount.

   8. Click Add.

   9. Repeat these steps for each journal line item.

5. When you are done entering line items, verify that the Out of Balance by Debit/Credit fields are blank. If either field contains an amount, your line items are out of balance. Your line items must balance to save the journal.

6. Click Save.

Upon saving a journal transaction with taxes, the tax details are sent to the appropriate tax engine for reporting purposes. No tax engine response is expected after saving the transaction.

Note:

When you edit journal entries, if you receive the following error message: "This taxable transaction cannot be saved because its on-demand migration to SuiteTax failed", there is an alternate solution. Edit the affected journal, remove the date in the Reversal Date field and click Save. Edit the journal and re-add the date in the Reversal Date field, and update the necessary non-posting fields. Click Save.

For information about nexus and tax account mapping on journal transactions, see Nexus and Tax Account Mapping on Journal Entries in SuiteTax.

General Notices