A business can incur penalties and interest if it fails to pay debts on time. Most often, penalty and interest fees originate with a state or federal tax agency, and while they add to the total amount due, they are not part of the original bill. In cases where tax agencies assess multiple penalty and interest charges, there are strict requirements for the order in which you receive credit when sending in payment. The easiest way to enter and keep track of penalties and interest in QuickBooks is to create a new account for these charges and enter them as separate transactions.
Create Vendor Account
Select "Vendors" from the QuickBooks main menu, then "Vendor Center" and click "New Vendor."
Enter the agency information. List the agency name, such as "Wisconsin Department of Revenue" as the company name.
Click "OK" to finish. Create a new vendor account for each agency if there is more than one. For example, if you owe penalty and interest fees to your state for unpaid or late payroll and sales tax, create an account for each.
Create a “Penalties and Interest” Account
Select "Lists" from the QuickBooks main menu, then "Chart of Accounts." Right click on any open area in the Chart of Accounts window and select "New."
Select the type of account to set up. Select the last radio button with the title "Other Account Types" and from the drop-down list select "Other Current Liability Account."
Name the account and add a description to identify it. If you use account numbers you can add the account number in this window. Click "Save & Close" to return to the Chart of Accounts or "Save & New" to add another account.
Enter Penalty and Interest Charges
Access the appropriate vendor from the Vendor Center. Click on "New Transactions" from the Vendor main menu and then "Enter Bill" from the drop-down menu.
Enter penalties and interest billing information. Select the "Penalties and Interest" account from the Account drop-down menu, then enter the amount and type in any identifying information from the penalty notice, such as document number, dates or account numbers in the Memo field. Make sure you enter the correct date (the date you received the notice) in the Date field to assist you in keeping track of multiple fees.
Finish and close the application. Click "Save & Close" to return to the vendor register or "Save & New" to add another bill.
Things You'll Need
QuickBooks Pro, Premier or Enterprise
Penalty and interest notices
If you find you cannot pay your tax bill, call the appropriate agency immediately. You may be able to work out payment arrangements and avoid financial disaster.
Tax bills should be at the top of your list of “bills to pay.” Penalties and interest fees can escalate and compound rapidly.