Taxes are involuntary fees levied on individuals or corporations and enforced by a government entity.
As this is a business planning, taxes must be a part of your planning but it is not that important aspect of business planning. So instead of taking too much stress about taxes, let's just set standard rates to make sure that your forecast includes basic tax coverage. The taxes we’re talking about here are theoretical expenses based on theoretical profits. So we won’t go in too much detailed forecast calculation with taxes instead we will apply basic tax coverage.
Do i need to include taxes in the revenue streams?
There is no need to include taxes into the revenue stream values. System will calculate taxes separately based on tax rate you would set. Taxes will appear as a separate expense in various financial statements.
Here are the steps to setting up tax rates:
On the Working Capital Page click ‘taxes’
Tax Rate: Scroll down and enter tax rates and paid-out frequency as follow:
How taxes reflects in various financial statements:
See how the taxes reflects in all three main financial statements Profit & Loss statement, Balance Sheet and Cash-flow Statement as follow:
Where does the Taxes appear in Profit & Loss Statement?
Paying income taxes is an expense of running a profitable business. So under the additional expenses, you will see income tax row as shown below.
Where does the Taxes appear in Balance Sheet?
Income Tax payable is a liabilities in balance sheet as shown below:
Where does the Taxes appear in Cash-flow Statement?
In the Cash Flow, Paying taxes reflects the available cash. In the cash-flow statement you'll see your tax entries expressed as "Changes in income tax payable," meaning the increase or decrease in how much tax you owe in a given month or year