Tax Reporting

In Lodging Accounting, there are two ways taxes need to be reported in order for your Balance Sheet to balance.

Lodging accounting differentiates from Cash Accounting as there are payments often received for goods/services that have not been offered. That creates a liability for the property but also makes it more challenging to estimate the taxes to be paid; the tax to be paid for any given period is not only based on the revenue but also the receipts of that period.

The Uniform System of Accounting for the Lodging Industry indicates two tax amounts that need to be entered.

Income Tax Payable: Income Taxes Payable represents the estimated obligations for income taxes; this will be the amount you see in your innCenter reports for the Tax based on your revenue for the given period of time (all room and incidental charges for a date range)

Deferred Income Taxes- Current: Represents the tax effects of temporary differences between the bases of current assets and current liabilities for financial and income tax reporting purposes. For Example, revenue recognized in the financial statements before it is taxable (as in deposits received for future stays) will result in current deferred income taxes if it will be taxable in the next year (or quarter). Current deferred income taxes are presented as net current assets or current liabilities as circumstances dictate.

You can pull a tax report by going to your Reports Module, then clicking on the Ledger Balances report. From your Ledger Balances report, choose the appropriate date range, then scroll towards the bottom of the page and click on tax items. Then click on Go to proceed.

Use the system generated tax based on your revenue for the period in question: $6,552.39 (example amounts)

Use the Total Receipt for the same period and calculate the tax based on your: $62,405.84*10%=$6,240.58 (example amounts)