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Record a purchase and pay a vendor
Purchase invoices, withholding on vendors, and payments.
A purchase invoice records what you owe a vendor for goods, services or assets. Each line goes to an expense or asset account, the VAT goes to VAT Input (1105), and any withholding tax you deduct from the vendor is held in Withholding Tax Payable (2105) until you pay it to the Tax Authority.
Steps
- Payables (Purchases) → Purchase Invoices → new invoice. Select the vendor, set the VAT % and, if you deduct tax from the vendor, the withholding %, then add the lines with their expense or asset account.
- Save & Post the invoice. The vendor's balance increases.
- To pay: Payables (Purchases) → Payments → new payment. Select the vendor, the cashbox or bank account paid from, and the amount, then post.
- Tax → Withholding Report lists every deduction by vendor and customer for Form 41.
Good to know
- Withholding is calculated on the subtotal before VAT. The amount you owe the vendor = subtotal + VAT − withholding.
- Posting writes: debit each line account and 1105 VAT Input; credit 2101 Accounts Payable with the net amount and 2105 Withholding Tax Payable with the tax withheld.
- Purchase invoices are numbered PI-year-number and vendor payments PV-year-number. Posted documents cannot be edited; drafts can be deleted.
Common questions
Example: office supplies of 2,000 with VAT 14% and withholding 1%. What is posted?
VAT is 280 and withholding is 20, so you owe the vendor 2,260. The entry debits the expense account 2,000 and VAT Input 280, and credits Accounts Payable 2,260 and Withholding Tax Payable 20.
Can I pay a specific purchase invoice?
Payments are recorded against the vendor, not a single invoice, and reduce the vendor's overall balance. Check Financial Statements → Vendor Statement to see what remains open.
Where do I record buying a fixed asset?
Use the asset account on the purchase invoice line. If you then add the asset under Fixed Assets for depreciation, skip its "post acquisition entry" option so the cost is not booked twice.
Last updated: 2026-10-26