thread How does Cash discount program affects my taxes? in Payments Troubleshooting

How does Cash discount program affects my taxes?

WildSourdough — Sat, 20 Sep 2025 19:22:06 GMT

HI, I am trying to figure out What a Cash discount program does to my taxes? All my products have a 3.25% fee add to them to cover cost of doing business. When a customer comes to pay cash they get that discounted off there bill. At the end of the day my Gross and Net Sales are different.

My big question is what is being reported on my taxes? My sales are showing say $100 but my net is showing $89. Since these number are cash and credit transactions combined what is really being reported?

I am worried at the end of year my 1099k is going to say we did more in sales then we actual sold.

Any help would be great.

Thank you

Adam

Re: How does Cash discount program affects my taxes?

Candlestore — Tue, 09 Jul 2024 14:25:15 GMT

@WildSourdough ;

The 1099 at the end of the year will show what Square deposited into your account. So you have the $100 sale and $89 deposit in this case. So Square will send the amount that was sent to your Bank account in the form of a payment, $89. The difference here between $100 sale and the $89 deposit is usually just Squares fees. When I do my sales in an Accounting package, I show Item Sales plus Sales Tax - Discounts - Square Fees. This amount is then equal to my deposit from Square to my business checking account. The 1099 at the end of the year matches (except rounding errors) what my accounting software shows for deposits. The 100 is basically your Gross Sales and the 89 is Net sales income. You still have other overhead charges like electricity, rent, water, cost of goods, wages and shipping deducted from all that to show your net business income. This is why I recommend getting an accounting software package to keep track of all these other expenses and receipts. Square is just showing your your Income from Credit Card Sales on a 1099. Cash sales do show up in reports but will not show up on a 1099. Your sales reports do break down how much cash and credit cards were use to buy you items or services. You can use Spreedsheets to show bills and expenses but most financial instituions want a Profit and Loss statement and Balance Sheet that is produced by an accounting package.

Re: How does Cash discount program affects my taxes?

WildSourdough — Tue, 09 Jul 2024 15:09:12 GMT

Thank you for responding. I am aware of the square fees are taking out of the credit card gross transactions. I do use QuickBooks to track all the expenses and logging of payments.

I sell at farmers markets and it's about 50/50 when it comes to cash and credit card sale. I just want to verify since I have so many cash sales that I do apply a discount to that It won't hurt me on taxes.

With what you are saying it sounds like I should be fine.

Re: How does Cash discount program affects my taxes?

Candlestore — Tue, 09 Jul 2024 15:36:39 GMT

@WildSourdough ;

I agree you should be fine.