Tax Collection and Deposit

Dp311 · ‎08-02-2023

Solved...we hit tax included in item price.

My wife and her sister started an online boutique and got their first few sales. In the transition details on Square it shows the Ohio 7% take in parentheses but that was not deposited into their account.

Was the tax not taken out or is it somewhere else. We want to make sure everything is set up properly before we get too far in and realize a mistake was made.

TheRealChipA · ‎08-02-2023

Hi @Dp311.

Scenario 1

If your retail price of items includes the sales tax, then what will be deposited into your account is:

Item Price (which already includes sales tax) minus card processing fees

Your Sales Tax report in Square will show you how much of the sales are attributed to sales tax so that you can file and remit the proper amount.

Scenario 2

If, however, your customers are supposed to pay sales tax in addition to the item price (ie - customers pay an additional 7%), then you do not want to specify that “tax is included in the price.” Then, the customer will pay that additional amount, and the deposit will be:

Item Price plus 7% sales tax minus processing fees.

I hope that makes sense.

Chip A.
Square Expert & Innovator and member of the Square Champions group. (But NOT a Square employee, just a seller like you)

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JK_Fiber_Art · ‎08-02-2023

Hello Dp311,

I believe we need to understand a few more things. Is your thought to include the Tax in the cost of the item and you will figure that out after the payment? We do this and also include shipping in the cost of the item - from the customer's perspective, they see free shipping and no tax. Behind the scenes, we do the rest of the work - it's more work for us but, our customers are happy. The amount deposited is what we expect minus the transaction processing fee.

If you're including the Tax in the cost of the item - have you enabled the item to Non-Taxable ? There's a checkbox for that option - Items, Edit Item, Non-Taxable - "No taxes apply when selling this item via Square Online or Point of Sale".

jk