can you use the penalty expense account for late payments also

by Renee
(Alabama)

Can I use the penalty expense account for my late payments as well as penalties


-----------------------------------------
Hi Renee,

Usually what I do is determine if the late charge I'm paying is just a fee, or interest. If it's interest (like a credit card payment) I post the late charge (not the payment - just the late charge) to Interest Expense.

If the late charge is just a fee, not interest, I just post the whole payment (regular payment plus late fee) to the expense account for the bill.

The time to use a Penalty Expense is for tax penalties. Penalties are not deductible on your tax return, so you don't want to post any late fees to that account.

Hope that helps Renee!

Kathy

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Ask the Expert!.