I’m not sure if this is an ERPNext question or an accounting question, but so far I haven’t been able to get a clear answer from the accountants I’ve consulted.
Like many businesses, we frequently have to manage withholdings, either for employees as part of payroll or for suppliers as tax deducted at source. All of these amounts are party-based. If I withhold $100 from Alice and $150 from Bob, I must pay exactly those amounts under each of their names. I can’t just drop $250 off at the tax office, like I can with VAT.
In ERPNext, accounts can be made to require a party by marking them either payable or receivable. I’ve noticed that nobody really does withholdings this way, and making it work actually requires some significant hacks to base code. In the Payroll Entry doctype, for example, deduction accounts can’t be marked as payable, and in Purchase Invoices taxes can’t be marked payable either.
Is there a reason for this that I’m not understanding, or is it just not something that’s been done for ERPNext yet? Is there a reason that withholding accounts should not be treated as payable?