Calculating Use Tax

[True_Vine]

If I use an item out of my inventory, I owe use tax on the amount I paid wholesale for the item.  Does Square have a report on the items pulled from inventory and used in the store so I can calculate the use tax I owe?

[TheRealChipA]

Hi @True_Vine. Can you provide a little more information since there are a couple of ways to “use” these items in your POS?  When you pull an item for use, how do you record that in your POS, so that inventory is reduced?

[True_Vine]

Hi @TheRealChipA.  I just started and am trying to figure it all out so I may be missing something or unsure about how best to explain, but here goes:

I have 3 bottles of win in my inventory.  I open one for a potential client and we drink it while trying to get their business.  On the Square terminal, I start a transaction and use a 100% discount to remove it from my inventory.

Now I owe the state 8.25% tax on the wholesale price of the bottle since I used it without selling it.  Since there was no transaction, the sales tax wasn't paid into my account but I still owe the state so I need to know the monthly total of bottles I've comped to potential customers.  BTW, should I be using the comp feature instead of the discount?

Thanks  

[TheRealChipA]

@True_Vine It wouldn't matter how you discount it, really.  But you did answer my question -- you record it using effectively a 100% discount of some time, be that a discount code or a comp.  My suggestion would be this.

Create a discount code that you ONLY use for this purpose.  It will be a 100% discount, manager locked so that your employees can't use it "by mistake." LOL. Use that code to discount these items.  Then, at the end of the month, run a discount report to get the total of items you discounted this way.  Manually compute the extra use tax and either record it on a separate line in your monthly remittance, or add it to the other numbers.  My state has a separate use tax line specifically for this purpose, so that it doesn't get lumped in with the other numbers.  Just follow your state's rules on this and you'll be fine.

I hope that helps, but let me know if you have any other questions.