Am I responsible for taxes if I’m a contractor?

[Lexsy_NTV]

Hello! I just got square and I’m a merch person for touring bands. They hire me to come on tour to sell their merch. I will be going on tour next month with a new band that’s from Germany and they needed a POS for sales in the US and Canada. However, I don’t want to be responsible for THEIR taxes on the merch that is sold. Since they’re German they couldn’t make an account which is why they asked me to do it. 

- Is there a way to circumvent that process by adding them as a user?

- Or how do I get around it being considered MY business income (when it’s not)? 
other side question: 

how do I sell in person in Canada with Square? (I’m from the US) 

thank you community!! 

[Stacelyn24]

That’s a great question, and I totally see why you’d want to make sure the tax responsibility doesn’t fall on you personally. Since the Square account is under your name, all sales processed through it will likely be considered your income for tax purposes, which means you could be responsible for reporting and paying taxes on it.

Ways to Avoid Being Taxed for Their Sales:

1. Have the Band Set Up Their Own Square Account (If Possible)

   • Even though they’re based in Germany, they may be able to register a Square account if they have a U.S. or Canadian business entity, tax ID, and bank account. If they have any kind of U.S. LLC, this could be an option.

2. Use a Business Entity Instead of Your Personal Square Account

   • If you must use Square under your name, consider setting up an LLC or business entity to keep these transactions separate from your personal taxes.

3. Manually Track & Deduct Payouts to the Band

   • If you must process payments through your Square account, track all sales and payout the earnings to the band. You’d want to create a paper trail showing that this income isn’t yours—perhaps by issuing them an invoice for the exact amount of sales processed.
   • You may still receive a 1099-K form from Square if you exceed tax reporting thresholds, so keeping good records is crucial.

4. Consult a Tax Professional

   • Since this is a tricky situation with international sales, it’s worth talking to a tax pro to see the best way to handle it without getting hit with unexpected tax liabilities.

Selling in Canada with Square (from the U.S.)

• Square's U.S. accounts can’t process payments in Canada (and vice versa).
• To sell in Canada, you’d need to set up a separate Square Canada account with a Canadian bank account and business details.
• A workaround is using Tap to Pay with a Canadian partner payment processor, but that may require extra steps.

Final Thoughts

If possible, the best solution is having the band set up their own account to avoid tax headaches. If that’s not an option, keeping detailed records and properly transferring sales earnings to them will be important to protect yourself.

Hope that helps! Let us know what route you decide to take.

[Lexsy_NTV]

Could you please tell me a little more about the Invoice process you mentioned? 

is it me sending them an invoice for the amount of money that was made at the end of the month? 

[Candlestore]

@Lexsy_NTV ;

As @Stacelyn24 tis is a Tax question and with different countries involved and different ppl (you and the Band) this is out of the scope of this forum.  You should talk to an accountant about this as there are multiple taxes you would have to consider. 

1.   Sales Tax -  When the Item is sold at the Location.  In the Use each State, County or City might have different rates.  Since this is Paid by the buyer as a % of the purchase which would go through Square.  The money from the sale would be used to Pay the Sales Tax. Who's bank account does the Sales proceeds go to?  This would be who is responsible for the Sales Tax.
2. Income Tax at the end of the Year.... Again the money is deposited to you.  So You Earned the money to Pay the Income Tax.  You would be the one Square sends the 1099 form to.  Now if out of the Square Account you pay the Band, you may need to send them the Form you pay them similar or maybe even a 1099 from you to them.  Again this is over the heads of most small businesses here.
3. Your accountant should be able to help you out and be able to set aside money from the sales to pay these taxes, and help you keep everything legal.  What I would do is set aside X amount to pay sales taxes for that area, and also set aside for the Country that would collect income tax.  This way at Tax time you have the money set aside and neither you nor the band has to worry about it.  

I would setup a Business Account, Setup an Accounting Package to monitor the Cash going in and the Cash going out.  Any payments associated with the business, and money sent to pay sales taxes through the year, any payments to you and payment to the Band.  So have a Savings account setup to Pay the Income taxes.  Before doing this tell them that the $$ coming in will go to X account, Setup fees, Electric Fees if any and Local Fees for selling would come out of that account unless they pay them up front.  You make Sales, Square deposits go in the account Net of Square Fees. So out of that amount at minimum could be local Sales Taxes that would be due.  Square has a report that can show you this.  Then you should have close to your incomes, and lets say Income Tax might be 30%, put 40 or 50% aside into a Savings account.  The remainder you and the band can split as agreed upon, and then at Tax Time use the Savings account to pay your income taxes.  This way it is not on you or them to take it out of your pocket.  Any left over you split again as per your terms.  Who is supplying the products and paying for these items too, might have to be considered.  

Get a good bookkeeper and accountant to supervise these accounts and all money coming in and out of your business for your paper trail.  Set the Bank account up that 1 person is not able to with drawal money from it that you and a Band member would have to approve of withdrawals.

Just know that because you sell an item for $10, Square will only deposit $9.70  for example.  Square fee of 2.6% plus 10 cents per transaction, so lets just call it 3% Square Processing fee for the above.  The Square fee is taken before any money is deposited to you bank account associated with your square account.

These are all things I just thought of answering this, which means I could have missed things and could have missed tax laws which is why you need to set this up with an accountantant and possibly a lawyer.