What are some workarounds to handle negative cost items through Square?

[MAS2]

The title of this thread has been edited from the original: Negative invoice amount no longer allowed?

Square used to allow negative cost items, for instance deposit pre-paid, now that seems to have gone away. Is there a workaround that does not effect sales tax?

[Summer2024 · Accepted solution]

Hi, @MAS2 !

There are a few workarounds for handling negative amounts in Square, particularly for deposits or prepayments, while avoiding sales tax complications:

1. Create Custom Items with Modifiers

   • Create a regular item (e.g., "Deposit")
   • Add a "Custom Amount" modifier that can be adjusted to the negative value
   • This keeps the main item positive but allows for negative adjustments

2. Use Custom Discounts

   • Instead of creating a negative item, create a custom discount
   • Discounts don't typically affect sales tax calculations
   • You can set up specific discount items for different types of deposits

3. Split Transaction Method

   • Process the deposit as a separate positive transaction initially
   • When the customer makes the final purchase, apply the deposit amount as a discount
   • This maintains clean bookkeeping and proper tax handling

The most recommended approach is using the Custom Discount method, as it:

• Maintains clean accounting records
• Doesn't interfere with sales tax calculations
• Provides clear tracking of deposits and prepayments

I hope this helps!