Sales Tax note to the financial statements

This note will address your treatment of any sales taxes applicable to your business endeavor. Recall, most states and provinces require retailers to collect sales taxes from their customers and remit these taxes to the state/provincial government. Don't confuse a sale tax with income taxes or any other tax.

Many financial planners omit sales taxes from their forecasted financial statements. These planners suggest sales taxes, for the most part, are immaterial. Moreover, when a company makes a sale to a customer, the money coming into the company will consist of the price charged for the product plus the necessary sales taxes (if any). If the company does not increase the selling price to accommodate the sales tax, then the company does not have to consider sales tax in their forecasted financial statements. Moreover, sales taxes are generally collected by a business, as sales are made, and remitted to the government on a monthly bases. Below provides an example of a sales tax note to the forecasted financial statements.

Sales Taxes:
For simplicity, sales taxes are not included in the forecasted financial statements. The exclusion of sales taxes do not affect the integrity of our forecasted financial statements, since the company would simply collect the tax from each customer (when sales are made) and remit the total to the government.