Bad Debt and PrintSmith
Many times you will have clients who for what ever reason doesn't pay you. Bad debt as it is called, needs to be written off of your books and PrintSmith. Now (year end) is the perfect time to do this.
Many accounts prefer to just write off your bad debt on your tax returns and balance sheets. This is fine, but they forget or ignore the fact that it should be taken off of PrintSmith AND sales taxes that were paid on them need to be recovered.
As a result, I suggest that you do a journal entry in PrintSmith to remove the bad debt. This will automatically decrease your sales for the month, which, decreases your tax liability as well.
Some users will set up another sales category called "bad debt" and have the journal entry go into this category. That is not a bad idea, however, remember to have it affect sales so that the sales tax gets accounted for.
Also remember, bad debt is a function of doing business. Although you want to limit your bad debt, it is not a bad thing to have some bad debt as well.All companies, large and small budget for bad debt! |