Forecasting Tax

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Overview

Accurate tax forecasting prevents unexpected cash outflows. In Francis, you can model estimated tax expenses and any resulting liabilities well in advance, making it easier to see how pending tax payments affect your overall cash flow. This guide shows you how to structure tax expenses on the P&L, track liabilities on the balance sheet, and import journal entries that capture real-world accountant adjustments.

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Basics

Tax expenses typically appear in December, creating a liability on the balance sheet. You can use conditional formulas (e.g., if()) to forecast monthly variations. In practice, these entries may not be finalized until mid-way through the next year, once annual statements are complete.

To address this:

• Create a journal entry for the expected tax expense. By estimating your yearly tax in advance, you can import the liability directly into Francis rather than waiting for final calculations.

• Apply adjustments as needed. When accountants finalize the actual tax expense, import a single adjustment entry instead of a completely new record.

By following this approach, you’ll ensure your financial model reflects accurate tax forecasts and stays up to date with real-world accounting practices.