What is the best practice for coding/expensing sales tax. We currently break out the sales tax on each invoice per item per department. Do you know if companies set up one expense account and all sales tax is charged to this one account?


Coding sales tax is handled in many different ways depending on a company's system, resources, organizational structure, and management's philosophy on how far down to drill into an expense. Some companies do record sales tax into a single GL account number. Others want to track it by product, assuming products or services are subject to sales tax. Each product may have its own GL number or it's grouped by marketing channel.

Since you are finding it difficult to keep up with the coding as it stands today by department you may want to consider the following strategies.

  • Find out who is using the sales tax information and how its getting used.
  • If you have a tax department compiling and completing the sales tax returns, find out if they need it by department or if they can get it in a single account.


  • Seek out suggestions from your peers at the AP Network in the Forum to see what they do with their sales tax coding. You may want to indicate the accounting system that you are using as well.
Have more questions? Submit a request