Configure ledger posting groups
The ledger posting groups control the automatic posting of sales taxes in Finance. You need to create the accounts that the general ledger uses in the chart of accounts before using them to set up the ledger posting groups.
The following characteristics apply to ledger posting groups:
- A ledger account is updated automatically when the system calculates taxes and updates invoice posting.
- Because each ledger account can use several tax codes, a ledger posting group determines posting.
- Each ledger posting group can contain several ledger accounts.
- You can set up ledger accounts that have the posting type of Sales tax to select the accounts in the Account group page.
- Changes that you make to the ledger account numbers in Ledger posting groups only affect transactions that have not yet posted.
Watch this video to learn how to set up the Ledger posting groups:
The number of accounts you need to set up depends on the use of the group and national law. For example, you can set up accounts for the following:
- Sales-tax payable
- Use-tax payable
- Settlement account
- Sales-tax receivable
Sales tax is calculated and posted to main accounts that are specified in the Ledger posting groups. Ledger posting groups are attached to each sales tax code. You can set up individual ledger posting groups for each sales tax code, use one ledger posting group for all sales tax codes, or assign multiple ledger posting groups to the sales tax codes.
The ledger account in the Sales tax payable list is where you post the outgoing sales tax as part of the company's liability.
Finance debits the outgoing tax in the customer account and then credits this account. Debits are automatically recorded in the account and settled upon payment of the taxes. The ledger accounts available in the Sales tax payable list are the posting type of Sales tax in the chart of accounts.
Enter the ledger account that offsets the use tax expense for taxes that vendors do not claim in the Use tax payable list. The way you use this account depends on the type of tax system your company chooses:
- Non-U.S. taxes – In this account, you will indicate a use tax expense account for the ledger posting group. For any sales tax groups that contribute amounts to this ledger account, select the Use tax field on the Setup tab on the Sales tax group page.
- U.S. taxes - The amount in this account offsets the taxes posted as expenses if the Apply sales tax taxation rules is enabled on the General ledger parameters page. The vendor is not required to collect the tax. However, the company might still owe taxes to a sales tax authority and must track such taxes.
If the Apply sales tax taxation rules is enabled on the General ledger parameters page on the Sales tax tab, the Sales tax receivable field is unavailable. Instead, the system debits sales taxes paid to vendors as expenditures (costs) to the same accounts as the purchases.
If you select a main account on Vendor cash discounts that includes a sales tax amount, also make sure you select the Reverse sales tax on cash discount and Cash discount is calculated on amount including sales tax sliders in the General ledger parameters page.
