Withholdings made and certificates
How to control the withholdings the company makes on its suppliers as a withholding agent: calculation, amounts payable to the tax authority, monthly return and payment, withholding certificates and GoSoft's report.
When your company is a withholding agent, it must deduct a percentage when paying certain suppliers and hand it to the tax authority. That money is not yours: you owe it. So each withholding is a liability, usually filed and paid every month, and you give the supplier a certificate for it.
- Record a withholding made and its payment to the tax authority.
- Review the period's withholdings report in GoSoft.
- Issue certificates to suppliers.
The cycle
- When paying or recording the invoice: the withholding is computed (rate × base, if above the minimum base) and recorded as a liability. See the example in Taxes and withholdings.
- At month end: all withholdings are added up by type and the withholding return is filed.
- When paying the tax authority:
| Account | Debit | Credit |
|---|---|---|
| Income tax withholding payable | 25,000.00 | |
| VAT withholding payable | 14,250.00 | |
| Bank | 39,250.00 | |
| Equal totals | 39,250.00 | 39,250.00 |
- Certificates: the supplier receives a certificate of what was withheld so they can deduct it from their taxes (monthly, bimonthly or yearly, depending on the country). In the US the equivalent is the information return (for example, Form 1099 with backup withholding).
In GoSoft, step by step
Set up withholding types with rate, minimum base and account in Taxes and withholdings.
When recording purchases and payments, GoSoft applies the withholding according to the supplier and purchase type.
Open Financial reports → Withholdings made, choose units and period and click View: you see base and amount withheld by type and by supplier.
gosoft.app
Withholdings made in the period Use the total for the return and the per-supplier detail to issue certificates. Export to Excel if your authority requires an attachment.
- Withholding and not filing or paying: one of the most serious violations in almost every country.
- Paying the supplier in full and "absorbing" the withholding as an expense.
- Not issuing certificates: the supplier cannot deduct what was withheld.
Why is a withholding made a liability?
Because it is the supplier's money the company must hand to the tax authority.
What document does the supplier receive for the withholding?
A withholding certificate.
Where do you see withholdings by supplier in GoSoft?
In Withholdings made.