Glossary
VAT (sales tax)
VAT is a percentage added to the selling price that you collect from the customer and pass on to the state, so it is not your income.
What it means for a shop owner
You pay the state the gap between what you collected on sales and what you paid on purchases. The rate and rules differ by country, so check your own. Keeping it apart from income stops you counting the state's money as your profit.
A worked example
You sell for 100 with 10% VAT, so the customer pays 110. You collected 10 for the state. If you paid 4 VAT on purchases, you hand over 6.
Related
Try it in your shop, free, no card.
The free plan: the whole shop for one branch, an offline cashier with stock, debts and accounting, with a daily limit on invoices, expenses and purchase orders. What it includes