How MYOB Can Be Used To Prepare VAT Reports

Before you can take advantage of how MYOB made it easier (at least, easier than manually doing it) for you to prepare your VAT Reports, you must first comply on how to implement VAT in your business. MYOB follows strict adherence to the generally accepted accounting principles. There are no exceptions. For that reason, at the very first occurrence of a business transaction, everything should run perfectly.

The following are the significant steps that you should observe when accounting for transactions subject to VAT.

1. Your manual procedure in handling transactions and documents that require VAT should be generally accepted, legal and ethical. If it is not, MYOB will not be able to handle your transaction completely as you wish. In manual accounting, every thing is easy to manipulate; but not with MYOB. MYOB makes sure that debit equals credit and that 1 + 1 = 2.
2. MYOB maintains a table of tax codes and rates. You need to enter the correct VAT rate.
3. You have to identify which of your products, purchases, and services are subject to VAT. You can set this up beforehand so that you do not tend to forget to calculate the VAT. You can actually set the VAT plug for each vendor and customer. It is like, tick Yes if the vendor is VAT registered.
4. For each invoice, billing, and disbursement you prepare in MYOB, the VAT should be calculated unless the transaction is not subject to VAT. If the invoice or billing statement shows a mix of VAT and non-VAT items or transactions, you can actually specify which is which in MYOB.
5. If you are doing every thing right and consistent, then there will be no problem printing the VAT report.

What is the VAT Report?

The VAT Report prints out the input VAT and output VAT transactions. Look at the bottom figures of the two reports. Any difference is what you remit or return to the Bureau of Internal Revenue. You can look at this report as the Summary of Alphalist of Withholding Agents.

This report is what you attach to your VAT Return. The report lists the customers and vendors that were subjected to VAT, their addresses, TIN, VATable amount, and the VAT. Unfortunately...

Exceptions, Exclusions, and Misfortunes

• Unfortunately, the VAT report does not show the VAT registration number. There is a workaround, though. You can use the other fields to accept the VAT numbers.

• BIR requires a certain format. The VAT report generated by MYOB is not exactly how it should look as required by BIR. Therefore, you need to export the report to Excel so that you can customize it to make it look exactly like the Summary of Alphalist of Withholding Agents.

• BIR recently required that receipts and invoices should disclose the summary of VAT and non-VAT transactions. This requires modifying the MYOB software itself. Unfortunately, only the MYOB developers can do that. So, you just have to wait for a new release of MYOB if ever MYOB would accommodate such changes. Meanwhile, you can use your hand to write the missing figures after you have printed out the receipt or invoice.

• If a withholding agent collected VAT from you, you need to secure a Certificate of Creditable VAT Withheld at Source (BIR Form No. 2307) from the agent. Not every company would have the time to issue one for you especially if the VAT amount is small. Therefore, you have to decide, at the point of entry, would you account for VAT as VAT, or account it as part of the cost?

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

Buy from Amazon

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.

Implementing MYOB

I've been using MYOB since, I think, 1998. This is the accounting software that I recommend to my clients for the reason that it was the first on-the-shelf accounting software accepted and recognized by the BIR in the Philippines. That means, BIR recognizes the books or reports generated by MYOB. And if you're registering your company that utilizes a computerized accounting system, MYOB is acceptable.

In my experience, it is easier to implement MYOB if the users are adept both in accounting and technology. If not, that is the challenge. Training is not enough. You need to guide the users through their implementation stage because what is important is that MYOB must be able to generate reliable financial data. That's why my services include training and implementation. MYOB as a technology is useless if it cannot generate reliable financial data. This reliability depends on the completeness of data. It is not enough that the users only know how to operate the software, they should also know what data to enter and understand the significance of the data they are entering.

It is not easy to break or change what the users have been accustomed to practice with the manual accounting system. Most likely, they'd rather not use MYOB. Therefore it is important that the users understand that MYOB cannot adapt to their old practices, instead, they themselves should adapt to MYOB; and as necessarily, change or eliminate some procedures they would no longer need.

Some financial transactions are very unique to a company. This is a challenge to a MYOB consultant. He must be able to provide the client a solution, an alternative step, or a workaround. In order for a consultant to be able to give that solution, he must have an in-depth knowledge of the principles of accounting and a clear understanding of MYOB's system logic.

Registering and Activating Your MYOB

This post is about:

1. Registering your MYOB
2. Activating your MYOB
3. Confirming your MYOB licenses

Registering MYOB

As soon as you receive your MYOB software CD installer, install it at once and register it online. Though you can also register it through your reseller or by fax, registering it online is the easiest. Registration is necessary before you can activate your company data file. It takes time before you can activate your company data file. You cannot activate it on the same day you registered your MYOB. The MYOB software itself will guide you how to register.

If you wish to register through your reseller, make sure that your MYOB CD has a registration card. If none, you can ask from your reseller. If you want it sent via email, request a pdf or jpeg copy.

Activating MYOB

You have 30 days to use your MYOB unless you activate it. While you have not activated it, it keeps on reminding you to activate it. To activate it online is the easiest and most convenient. You can also activate it by phone.

Enabling Your License

Enabling your license and additional licenses online is the easiest way to do it. You can also enable your licenses by phone, from which a recorded voice will give you the confirmation code that you have to enter in the license window. In case you purchased a multi-user version of MYOB Premier with additional sub-licenses, your MYOB reseller may require you to register the software through them. Just make sure that you give them the correct company code. The company code is automatically generated by MYOB.

If the Company Code didn't match the Confirmation Code

Each time you enable your license online, it generates the next company code. If the confirmation code provided by your reseller does not match the company code generated by MYOB, you can disregard the confirmation code and opt to enable your licenses online. You only need a confirmation code if you need to enable your licenses by phone or through a reseller. In some cases, your reseller wants to control the registration of your MYOB. That means even if you enable your licenses online, your MYOB remains a single user. You will need to wait until your reseller gives you the confirmation code.

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