Financial Analysis of Partners

169 • credit notes, • supplier credit notes. Tip: Reminders from accounting entries Companies that do not have computerized records tend to keep track of payments from invoices and paperwork and not from a formal partner account. It is better to create reminder letters from a partner’s account receivable than from unpaid bills, however. By using the Open ERP system you can easily take account of all advances, unreconciled payments, credit notes and credit payments. So it is better to send a letter based on the accounting entries of invoices and unreconciled payments than just on a list of unpaid invoices. In the links appearing on the partner form, two buttons enable the opening of partner accounting entries: • Journal Items, • Receivables Payables. The first button is useful for obtaining a historical analysis of the customer or supplier. You can get information about such significant items as sales volume and payment delays. The second button is a filter which shows only the open trade credits and debits for the partner.

14.2 Statutory Taxes and Chart of accounts

This section deals with statutory taxes and accounts which are legally required from the company: • the taxation structure provided by Open ERP, • the accounts ledgers, • account balance used to produce the income statement and balance sheet, • the different journals general, centralized and detailed, • the tax declaration. Tip: Other declarations In addition to the legal declarations available in the accounts modules, Open ERP supplies declarations based on the functionality in other modules. You can, for example, install the report_intrastat module for intra-stat declarations about sending goods to and receiving goods from other countries.

14.2.1 Taxation

You can attach taxes to financial transactions so that you can • add taxes to the amount that you pay or get paid, • report on the taxes in various categories that you should pay the tax authorities, • track taxes in your general accounts, • manage the payment and refund of taxes using the same mechanisms that Open ERP uses for other monetary transactions. Since the detailed tax structure is a mechanism for carrying out governments’ policies, and the collecting of taxes so critical to their authorities, tax requirements and reporting can be complex. Open ERP has a flexible mechanism for handling taxation that can be configured through its GUI or through data import mechanisms to meet the requirements of many various tax jurisdictions. The taxation mechanism can also be used to handle other tax-like financial transactions, such as royalties to authors based on the value of transactions through an account. 170 Setting up a Tax Structure Setup Taxation using Accounting → Configuration → Financial Accounting → Taxes → Taxes. Three main objects are involved in the tax system in Open ERP: • a Tax Case or Tax Code, used for tax reporting, that can be set up in a hierarchical structure so that multiple codes can be formed into trees in the same way as a Chart of Accounts. • a Tax, the basic tax object that contains the rules for calculating tax on the financial transaction it is attached to, and is linked to the General Accounts and to the Tax Cases. A tax can contain multiple child taxes and base its calculation on those taxes rather than the base transaction, providing considerable flexibility. Each tax belongs to a Tax Group currently just VAT or Other . • the General Accounts, that record the taxes owing and paid. Since the general accounts are discussed elsewhere in this part of the book and are not tax-specific, they will not be detailed in this section. You can attach zero or more Supplier Tax and Customer Tax items to products, so that you can account separately for purchase and sales taxes or Input and Output VAT – where VAT is Value Added Tax. Because you can attach more than one tax, you can handle a VAT or Sales Tax separately from an Eco Tax on the same product. Your Tax Declaration Tax Cases are also known in Open ERP as Tax Codes. They are used for tax reporting, and can be set up in a hierarchical structure to form trees in the same way as a Chart of Accounts. To create a new Tax Case, use the menu Accounting → Configuration → Financial Accounting → Taxes → Tax Codes . You define the following fields: Figure 14.7: Definition of Tax Code • Tax Case Name : a unique name required to identify the Case, • Company : a required link that attaches the Case to a specific company, such as the Main Company, • Case Code : an optional short code for the case, • Parent Code : a link to a parent Tax Case that forms the basis of the tree structure like a Chart of Accounts, • Coefficent for parent : choose 1.00 to add the total to the parent account or -1.00 to subtract it, • Description : a free text field for documentation purposes. You can also see two read-only fields: • Year Sum : a single figure showing the total accumulated on this case for the financial year. • Period Sum : a single figure showing the total accumulated on this case for the current financial period perhaps 1 month or 3 months. You will probably need to create two tax cases for each different tax rate that you have to define, one for the tax itself and one for the invoice amount that the tax is based on. And you will create tax cases that you will not link to Tax objects similar to General Account View types just to organize the tree structure. To view the structure that you have constructed you can use the menu Accounting → Charts → Chart of Taxes. This tree view reflects the structure of the Tax Cases and shows the current tax situation. 171 Define Taxes Tax objects calculate tax on the financial transactions that they are attached to, and are linked to the General Accounts and to the Tax Cases. To create a new Tax Case, use the menu Accounting → Configuration → Financial Accounting → Taxes → Taxes . Figure 14.8: Definition of Tax You define the following fields: • Tax Name : a unique name required for this tax such as 12 Sales VAT , • Company : a required link to a company associated with the tax, such as the Main Company, • Tax Type : a required field directing how to calculate the tax: Percent , ‘‘Fixed‘‘ , None or Python Code , the latter is found in the Compute Code field in the Special Computation tab, • Applicable Type : a required field that indicates whether the base amount should be used unchanged when the value is Always or whether it should be processed by Python Code in the Applicable Code field in the Special Computation tab when the value is Given by Python Code , • Amount : a required field whose meaning depends on the Tax Type, being a multiplier on the base amount when the Tax Type is Percent , and a fixed amount added to the base amount when the Tax Type is Fixed , • Include in base amount : when checked, the tax is added to the base amount and not shown separately, • Domain : is only used in special developments, not in the core Open ERP system, • Invoice Tax Account :a General Account used to record invoiced tax amounts, which may be the same for several taxes or split so that one tax is allocated to one account, • Refund Tax Account : a General Account used to record invoiced tax refunds, which may be the same as the Invoice Tax Account or, in some tax jurisdictions, must be separated, • Tax on Children : when checked, the tax calculation is applied to the output from other tax calculations specified in the Childs Tax Account field so you can have taxes on taxes, otherwise the calculation is applied to the base amount on the transaction, • Tax included in Price : when checked, the total value shown includes this tax, • Tax Application : selects whether the tax is applicable to Sale, Purchase or All transactions, • Child Tax Accounts : other tax accounts that can be used to supply the figure for taxation.