How To Account VAT That Is Shared By Two Companies Using MYOB

Some expenses can be shared by two companies like rent, electricity, or Internet, say, if they are occupying one office space. These expenses are subject to VAT and billed to only one company. If you are using manual accounting, you can easily proportion the charges and VAT, then collect from the other company its due share. However, if you are using MYOB, there may be a slight problem. You can allocate the amount as expense of the collecting company and the other portion as receivable from the other company; but you cannot allocate the VAT portion as receivable from the other company.

Let's look at the manual method

If you are using manual accounting, you can record the transaction this way, assuming you're using the cash method.

• To record the rent expense in full

Debit	Amount	Credit	Amount
Rent Expense	4000	Cash	4480
Input VAT	480

• To allocate the sharing of the rent, debit the VAT portion to a contra account of Input VAT. This is to ensure that your Input VAT always reconciles with the VAT you remit to the BIR.

Debit	Amount	Credit	Amount
Due From Company B	2240	Rent Expense	2000
		Input VAT Shared	240

Recording it using MYOB

The trick is to create a new account which is a contra-account of Input VAT. Why is that? The reason is that your VAT report (that is generated by MYOB) should reflect the correct principal amount (or purchase value) and exact VAT paid. Using Spend Money, your entries should look like this.

Click to enlarge

Eventually, your VAT report should still reflect the amount in full.

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My portal to just about anything

MYOB Progress Report

MYOB Implementation Progress Report

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As a consultant, you need a Progress Report to let your client know how much you have accomplished. This report I designed, it's a blank form, will help you keep track of your progress and your client informed as well. You can download this pdf file at Google Docs.

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Implementing MYOB Step by Step

If you're a consultant who needs to know on how to implement MYOB to your client; or a business owner who wants to use MYOB to aid you manage your financials, here's a step-by-step guide on how to implement MYOB.

Preparation

1. Install the software and register it online.
2. Create the company file and set the parameters.
3. Create the chart of accounts and enter the balances.
4. Activate MYOB and enable the license/s (if you bought more than one license).
5. Import the purchase and sale transactions of previous month/s.
6. Import the list of products and set the item prices and quantity on hand.
7. Import the list of customers and suppliers and set each parameters.
8. Customize the forms.
9. Enter the historical balances of accounts payable and receivable.
10. Set the security access and permissions.

Regular operations

1. Record the current purchases.
2. Record the current sales.
3. Record the receipts and deposits.
4. Record the disbursements.
5. Record other entries.
6. Reconcile the bank accounts.
7. Conduct an inventory count.
8. Print the reports; customize, if needed.
9. Backup.

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Receive Payments Does Not Display Invoice Number

Receive Payments Window

A payment from a customer may be partial or in full. It may apply to:

• A single invoice, or
• Multiple invoices.

In MYOB, it is easy to apply a customer payment because all outstanding (unpaid) invoices are displayed in the Receive Payments window. If you have a good accounting control procedure that strictly requires a purchase order from a customer and that you loyally enter the purchase order number in the Customer PO# field in the Sales Invoice window of MYOB, then you will have no problem entering a customer payment.

What if your office doesn't have that kind of strict control? This means that it's possible that you don't have a customer's PO. How would you know if a particular payment applies to the correct invoice?

MYOB does not display your invoice number, only your customer's PO number.

One solution is to use the Find Transactions of MYOB. But that's time consuming because you have to go back and forth from one window to another. Take a look at the image above. If you didn't enter a PO# in your invoice window, your only lead to the correct invoice is the date and the amount.

Invoice form window

Better Solution

Enter both your invoice number and your customer's PO number in the Customer PO# field.  For example, if your invoice number is 799499 and your customer' PO number is 123456, in the Customer PO# field of your invoice form, enter 799499--123456. See the example on the right image.

When you open your Receive Payments window, it will display your invoice number. That way, it will be easier for you to locate the invoice that your customer is paying. See the image on top for the example. Both the invoice and PO numbers are reflected.