Reporting Sales Tax Owed on Items used by my business

[vodhin]

How do I report and pay Sales Tax due on items that are used by my business but are not something we sell?

Case in point: I bought the Square Register and Square Inc. did not charge or collect Sales Tax. According to "Sales and Use Tax" rules on the Florida's Department Of Revenue website, I owe the State 48.93 in sales tax for this purchase. 

Furthermore, the Florida DOR only accepts one Quarterly Tax Return, meaning that I HAVE to file manually - defeating the benefits of my Square For Retail monthly subscription - if Square cannot report Sales Tax due on items used by my business.

[TheRealChipA · Accepted solution]

That first one is very odd, indeed.  I'm going to tag the moderators here in the Community.

@Kassi_@RSosebee1@_Violet@MayaP@Summer2024@Summer2024@Ellie_@Katie_SQ@Laurie_@Sammie_Ccan one of you check with the Square Hardware sales folks and determine if @vodhin not being charged sales tax on a Register purchase was a glitch, or something else?  I'm at a loss on that one.

Otherwise, @vodhin I'm guessing this is the first business you've owned?  If so, while I can't give accounting advice here, I can clarify a few things. 

Square collects sales tax from our customers on items and services we set up as being taxable.  However, Square DOES NOT file sales tax reports, nor does it remit sales tax monies collected on our behalf.  The sales tax is passed on to us in our daily transfers, and we are responsible for filing forms and remitting payment for those taxes each month.  Square provides reports to help us, but I emphasize again they DO NOT file forms or remit taxes.  You either do that manually on Florida's website, fill out paper forms or subscribe to a third-party app like Davo to do that for you.

Sales taxes we pay on purchases for our businesses are different.  We pay those to vendors when we buy things we use. Like us, they collect and file those sales taxes.  But Square is ONLY responsible to collect sales taxes on our behalf for our sales we record in their software.  The same is true of ALL POS providers.

Finally, it sounds like you need to sit down with an accountant so that they can help you get familiar with all of this.  Sales tax is only one part of the many regulations and such that are a part of our lives as business owners.  Another resource I can recommend is SCORE.  They are a resource available to small business owners to help navigate all of this complexity.  Follow this link to find a chapter near you.  Much of their services and mentoring is free, and much more is very low cost.

I'd get into more here, but we are prohibited by the TOS for this Community that restrains us from giving financial or legal advice.   What you are asking in the second part of your post stems from confusion and a basic misunderstanding of how business sales taxes work.  

[TheRealChipA]

@vodhin I want to clarify something, first.  Are you saying that you purchased a Register from the Square Shop online, and not through a 3rd party like Amazon or Best Buy, and that you were not charged sales tax on that purchase?  If that is the case, that is very odd and I will tag the Square Moderators here to look into that.  As long as Florida charges sales tax on such items, Square should have collected it and remitted it in their sales tax filings.

Occasionally, I have an online vendor that does not collect and charge Kentucky sales tax that they should have.  When that happens, Kentucky has a place on my monthly tax return where I can report those purchases and then pay the appropriate sales tax.  As long as sales tax was not charged to you when you when you purchased the Register, you should be able to do it anytime.  Just check with your accountant who can guide you in how to do that in Florida, since we don't give accounting or government tax compliance advice in the Community.

[vodhin]

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@TheRealChipA wrote:

@vodhin I want to clarify something, first.  Are you saying that you purchased a Register from the Square Shop online, and not through a 3rd party like Amazon or Best Buy, and that you were not charged sales tax on that purchase?  

This is exactly the case. I bought the Square Register through Square's website and was not charged sales tax.

@TheRealChipA wrote:

...Kentucky has a place on my monthly tax return where I can report those purchases and then pay the appropriate sales tax.  

Same here in Florida. However - and I have not opened my business yet so I do not have a way of verifying - the Square For Retail Subscription package I am paying for does the Sale Tax reporting to the state of Florida on my behalf. If this is the case, then sales tax on things I purchase for my business that should be taxed but are not taxed will go unreported through Square For Retail. It seems that you cannot submit more than one return per quarter: Either Square reports it or I manually report it, it cannot be both.

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[TheRealChipA · Accepted solution]

That first one is very odd, indeed.  I'm going to tag the moderators here in the Community.

@Kassi_@RSosebee1@_Violet@MayaP@Summer2024@Summer2024@Ellie_@Katie_SQ@Laurie_@Sammie_Ccan one of you check with the Square Hardware sales folks and determine if @vodhin not being charged sales tax on a Register purchase was a glitch, or something else?  I'm at a loss on that one.

Otherwise, @vodhin I'm guessing this is the first business you've owned?  If so, while I can't give accounting advice here, I can clarify a few things. 

Square collects sales tax from our customers on items and services we set up as being taxable.  However, Square DOES NOT file sales tax reports, nor does it remit sales tax monies collected on our behalf.  The sales tax is passed on to us in our daily transfers, and we are responsible for filing forms and remitting payment for those taxes each month.  Square provides reports to help us, but I emphasize again they DO NOT file forms or remit taxes.  You either do that manually on Florida's website, fill out paper forms or subscribe to a third-party app like Davo to do that for you.

Sales taxes we pay on purchases for our businesses are different.  We pay those to vendors when we buy things we use. Like us, they collect and file those sales taxes.  But Square is ONLY responsible to collect sales taxes on our behalf for our sales we record in their software.  The same is true of ALL POS providers.

Finally, it sounds like you need to sit down with an accountant so that they can help you get familiar with all of this.  Sales tax is only one part of the many regulations and such that are a part of our lives as business owners.  Another resource I can recommend is SCORE.  They are a resource available to small business owners to help navigate all of this complexity.  Follow this link to find a chapter near you.  Much of their services and mentoring is free, and much more is very low cost.

I'd get into more here, but we are prohibited by the TOS for this Community that restrains us from giving financial or legal advice.   What you are asking in the second part of your post stems from confusion and a basic misunderstanding of how business sales taxes work.  

[MayaP]

Thanks for the tag @TheRealChipA. I agree that the sales tax not being charged is odd. I appreciate your thorough reply and suggestions to help!!

[vodhin]

Thank you for the clarification: The sales pitch for Square For Retail Plus seems to be misleading, then: I was under the impression that this subscription would "Keep my business compliant with all state and federal tax reporting." I guess it doesn't.

[MayaP]

Of course! I’m sorry that wasn’t explained more clearly.

@vodhin 

[TheRealChipA]

@vodhin I have to agree with you there.  Maybe @MayaP can locate where the Retail Plus feature list says that and talk to the team about changing it.  With all Square products, it should say that it "gives you the tools necessary to keep your business compliant....."  Anything else could definitely be construed as misleading and worthy of clarifications.

[vodhin]

Don't knock yourself out. I also have Square Payroll. I could be conflating the information between the two. Either way, thank you for the information: I now understand that I will see sales tax on items we sell in a report, which I can then add to sales tax owed on any business supplies when I file with Florida. Makes sense now...

[MayaP · Accepted solution]

Hi @vodhin  thank you for clarifying those details. I am happy to look into why the sales tax on your order was not charged. Could you share the order number so I can review this further?

As @TheRealChipA mentioned, our point of sale will not report sales tax for you. You will need to connect with a tax professional or accountant to ensure everything is reported properly. When you are ready, you can learn more about setting up sales tax for items here. Once that is set up, you can view the sales tax report in Dashboard under Reports > Accounting > Sales Taxes.

[vodhin]

Could you share the order number so I can review this further?

Sure: US-264325804

[MayaP]

I escalated this to our Shop engineers. I will let you know as soon as I have an answer.

@vodhin 

[VanKalkerFarms]

Yeah, that is really odd, as it should have collected sales tax if the shipping address given was in Florida.  Definitely something that needs to be looked into.