Vendor Withholding & Credits

Use Vendor Withholding for taxes that you withhold from suppliers or subcontractors, or for credits that apply to purchases (for example, on GST taxes).

       When to Use Vendor Withholding | Entering Vendor Withholding | Data Fields
       Using Lists | Using Vendor Withholding

Website Info Links
       Accounting Software | Accounts Payable Software | Expense Tracking Software

       Employee Withholding | Material Purchases | Other Costs | Retainage
       Subcontractor Costs | Vendor Sales Tax

When to Use Vendor Withholding

Use Vendor Withholding whenever you need to pay a tax yourself on payments you make to a supplier or subcontractor.

HINT-- In the US, you may need to do this if you have a vendor who is out of state, if you pay a 'use tax' on those purchases..  

You can also use Vendor Withholding when you deduct money from payments you make to a supplier or subcontractor, and then pay it to a tax agency.

HINT-- In the US, the only time you'll use this is for backup withholding (uncommon).

You'll also use Vendor Withholding if you get a credit against the VAT tax you pay on purchases, which you subtract from the VAT taxes you collect from customers.

HINT-- This use rarely happens in the US, but it applies to Canada and many other countries.

When Not to Use Vendor Withholding

If you reduce the amount of a vendor payment and don't pay it to anyone, it's a discount.  You can enter one-time discounts as an adjustment in the Pay Bills command.  Enter early payment discounts into Vendor Payment Terms.

If the vendor collects an additional amount from you and pays it to a tax agency, it's a Vendor Sales Tax.

If you deduct backup withholding from an employee, you can handle it along with regular employee tax withholding.

If you withhold money from a vendor payment but will pay it to them later, it's retainage.

Entering Vendor Withholding

To enter Vendor Withholding rates, follow these steps:

  1. Choose Costs Setup from the Costs menu, then choose Vendor Withholding from the submenu.
  2. Click the New button, or click on an existing item and click the Edit button.
  3. Enter details for the withholding rate.

Data Fields

Enter the following information for each Vendor Withholding:

Name-- Enter a brief name for the withholding rate.
Comments-- Enter any comments you have about this withholding rate.
Paid To-- use the clairvoyant field to enter the agency that will receive tax payments. The field displays a list of  Other Cost accounts.
Breakdown Table-- Click in the Item column, and enter the name of the locality that receives this tax. Then click in the Percent column and type in the percentage rate they receive.  If there is a second tax component, press the Return key, and repeat the same steps in the next line.  Repeat as many times as you need.
Total Rate-- Goldenseal automatically calculates the total tax rate from the sum of its components.
Fixed Amount-- If the tax is a fixed amount rather than a percent, enter an amount into this field.  Otherwise leave it at zero.
Rounding-- Enter the way to round this final tax amount.
Deducted From Vendor-- Turn on the checkbox if you subtract the withholding amount from what you pay to the vendor.  Turn it off if you pay the tax yourself, without reducing what you pay to the vendor.

Using Vendor Withholding

To use a Vendor Withholding, open each Material Supplier, Subcontractor or Other Cost Account and enter the withholding rate that applies to that account.

Goldenseal applies the vendor withholding rate when you enter Material Purchases, Subcontractor Costs or Other Costs. The vendor's usual rate is entered automatically, but you can change it if that transaction has a different rate.

Goldenseal automatically deducts vendor withholding when you use the Pay Bills command.

You can also use the Pay Bills command to pay the withholding amounts when they are due.