Additionally: RE: Taxes — Most Specifically Location-Oriented for Businesses with Multiple Locations (BiCoastal)
Piggybacking on this discussion because the lack of a true Booking Fee designation creates an additional issue for businesses operating across multiple locations with different tax treatment.
I operate a bi-coastal business with locations in New York City and Los Angeles, and I currently use a non-refundable booking fee/prepayment that is applied toward the client's service total if the appointment is completed, but retained if the client cancels within the applicable cancellation window or does not show.
There are two separate issues I am trying to understand:
1. Location-specific tax treatment
My NYC location has applicable sales tax configured in Square, while my Los Angeles location does not have the same tax treatment.
However, the NYC sales tax sometimes appears to carry over to appointments/bookings associated with my Los Angeles location, requiring me to manually remove it. (regardless that I designated this specifically for NYC and did not select LA as an option.)
I need to understand whether Square's tax settings are intended to be location-specific at the appointment, service, and prepayment/deposit levels, or whether certain tax settings are account-wide.
Most importantly, I need to be certain that a tax applicable to my NYC services cannot inadvertently be applied to a Los Angeles booking or service simply because both locations operate under the same Square account.
2. How the booking fee/prepayment interacts with sales tax and the eventual service
This becomes more complicated because Square currently recognizes the booking fee/prepayment as a standalone completed transaction associated with the client's profile, rather than providing an obvious mechanism at checkout to apply that existing payment toward the service as a payment/credit.
For example:
Service total: $500
Booking fee paid before appointment/reservation: $100
Remaining balance at appointment/reservation: $400
If the $100 booking fee is recorded as a separate transaction and the final checkout is processed only for the remaining $400, how does Square ensure that the appropriate tax treatment of the full $500 service is accurately reflected?
Conversely, if I process the full $500 service at checkout and use Square's Discount function to subtract the $100 booking fee already paid, the $100 is being represented as a discount even though no discount occurred. That potentially affects gross sales, discount reporting, and tax calculations in a way that does not accurately reflect the underlying transaction.
*I am therefore trying to determine what Square's intended accounting workflow is for:
Booking fee/prepayment → completed service → application of prepaid amount → remaining balance → applicable sales tax
And separately:
Booking fee/prepayment → late cancellation/no-show → forfeited booking fee → applicable tax treatment
The second scenario is particularly relevant because Square currently provides the setting “Collect tax from forfeited deposits.” I need to understand whether that setting is account-wide or location-specific, and exactly how Square classifies and reports a forfeited prepayment when no service is ultimately performed.
For a multi-location business, I need to be able to ensure that:
- NYC tax is applied appropriately to NYC services/bookings;
- NYC tax does not inadvertently attach to Los Angeles services/bookings;
- a prepaid booking fee does not result in the underlying completed service being under-taxed or double-taxed;
- a prepaid booking fee is not misclassified as a discount simply to reconcile the client's remaining balance;
- and a forfeited booking fee is handled correctly for tax and reporting purposes when the underlying service never occurs.
Can Square please clarify whether this functionality is currently supported at the location level, and if so, where these settings are controlled?
If it is not currently supported, what is Square's recommended workflow for a business with multiple locations and different tax treatment using partial prepayments?
***This is becoming more than a terminology issue for businesses using Square across jurisdictions; it potentially affects tax accuracy, location-level reporting, and reconciliation of prepaid amounts.
