Sales Tax Q&A: How can we improve sales tax settings?

[Tom]

On November 10th, 2021 we hosted a Q&A with our Commerce Platform team which focused on sales tax settings.

The Commerce Platform team manages the sales tax product experience: everything from configuring tax settings in the online Square Dashboard to applying taxes to a sale, reporting, and filing.

One of the main goals of this event from our side was to ensure you're getting the most out of your tax settings and identify where Square can improve. We can't share out specific details on our product roadmaps, though we will certainly make sure all of the replies that came through on this post are considered as we iterate. Thank you to everyone who participated!

[samadhi1959]

I have both services and products at my practice. I don't have to pay sales tax on the services. Seems any item I set up in square you either apply sales tax of you don't. Therefore, I don't use it. I use my QuickBooks and manually put the tax in on my invoices. Pain.

[sqnick]

Thanks for the feedback everyone. We are working on a way to apply taxes to specific categories that sounds like it will address your needs. If any of you are interested in being included in the Beta group for this feature please let us know and we will follow up.

[divyar]

@BDaulton, 

Thank you for your feedback. Category based Tax configuration is coming soon. As of now, you should be able to deselect the food items in the product selector individually.

[TheModernDeer]

I wish the sales tax collected went into a separate account in square so that it didn't just all go into your balance.

[canofwhoop]

Big fan of this idea. Currently using the new Savings Account for this purpose. 

[CarrieC]

This is an excellent idea! I would love this option and would def sign up for a square checking or savings if it meant I could do that!

[sqnick]

Thanks for the feedback!, I would give a +1 to the suggestion of checking out Square Savings (https://squareup.com/us/en/banking/savings). With Square savings you can create a dedicated folder to hold your collected taxes.

We are working through how we might automate this process in the future where your collected taxes would automatically be set aside in a Square savings folder. Would something like this solve your need?

[sqnick]

Hey @TheModernDeer, I would give a +1 to @canofwhoop suggestion of checking out Square Savings (https://squareup.com/us/en/banking/savings). With Square savings you can create a dedicated folder to hold your collected taxes.

We are working through how we might automate this process in the future where your collected taxes would automatically be set aside in a Square savings folder. Would something like this solve your need?

[florencews]

That sounds like a very good idea!

[page158]

We sell books, gifts, etc which are all taxed at one rate. We also sell beer and wine which have the original rate plus an additional 1% that gets reported and paid to a different state entity. Fairly straightforward to set up in Square, but every time a new item is created via the Items screen, the beer/wine tax is active and it shouldn't be. Conversely if a new item is created via the API, no tax is set as active (as some others have already mentioned here). It would be helpful if each tax could be set as "add by default" (regardless how the item is created) or "add manually". 

I'd also like to confirm the rounding issue that others have mentioned.

[sqnick]

Hey @page158, We are working on a new feature that will allow you to have a tax automatically match a set of categories. It sounds like that would address your need here, as you would be able to create a general tax that applies to everything, and then a 1% tax that applies to your Beer and Wine categories. Then when you add a new Beer or Wine to your catalog it would automatically get the 1% tax, but all other items wouldn’t.

We are also aware of customer issues around our rounding rules. We are continuing to explore ways to introduce more flexibility around rounding in our platform.

[JustMikes]

I own a restaurant and use Square for Restaurants.  In the store system I have a tax rate set up My state sales tax and a tax rate for a non cash convenience fee that we remove if the customer pays with cash. My biggest issue with the Sales tax system is that with the online ordering you have to set the sales tax up there differently and does not sync with the POS. The sales tax rates for the online ordering should mimic what is in the POS.

On another note, if Square would allow for different pricing with online orders without creating a whole new menu this would also fix that problem.

[sqnick]

Hi @JustMikes. It sounds like you are talking about Pickup/Deliver/Self-Serve orders placed through Square Online. If that is the case, you can go into Square Online and navigate to the Sales Tax settings section. From there you can enable itemized taxes for the above fulfillment options. If you do that Square Online will use the same tax rates you use for POS in online checkout.

[RB6]

All my clients are sales exempt.  How do I turn off the sales tax that is automatically charged?

[sqnick]

Hi @JustMikes. It sounds like you are talking about Pickup/Deliver/Self-Serve orders placed through Square Online. If that is the case, you can go into Square Online and navigate to the Sales Tax settings section. From there you can enable itemized taxes for the above fulfillment options. If you do that Square Online will use the same tax rates you use for POS in online checkout.

[weredoughcookie]

I'm not sure but having easier settings for tax rules would help.

I own and run a bakery and cookie dough cafe in Flint, MI.

In Michigan baked items are not taxed, but my cookie dough, ice cream, and non baked items are. And when adding new items I constantly forget to make sure the tax is off of baked items.

Maybe have tax rates be able to be applied to categories?

[sqnick]

Hey @weredoughcookie, We are working on a new feature that will allow you to have a tax automatically match a set of categories. It sounds like that would address your need here. I provided more details on this feature in response to this post. Let me know if it sounds like this will work for your needs.

[weredoughcookie]

yes this will help a ton!

[mythicrunning]

My biggest Sales Tax nightmare is our three Sales Tax Holidays in which certain items up to a certain amount are tax free for a limited number of days.  For instance, during the Back to School Sales Tax Holiday, shoes $60 or less are tax free.  We have a few pairs of shoes that meet the criteria; those are easy enough to go in a change since they all tend to fall under a specific category.  Where we really struggle is with variations of items within the category that qualify as tax free.  The State also allows for tax-free up to a certain dollar amount on particular items.  For example, the first $300 of kayaks and canoes are tax free, but the remaining amount is taxable (i.e. a $600 kayak; the first $300 is tax-free but the remaining $300 is taxable).   It's an accounting/bookkeeping nightmare.  

[sqnick]

Hey @mythicrunning. Thanks for the feedback. I agree that there is still work to do here to provide more flexibility around taxing specific item variations as well as partially taxing items. We are continuing to explore ways to add additional flexibility around tax calculation and the two items you mentioned are on our list of seller needs.

[midwest-aromas]

My sales that do not come from square online are in person at events. I run a square stand through my phones wifi hotspot.

If square could pull the zip code that these sales take place in for their tax rate, instead of just the sales tax that I have for my registered business address in the app, and the county zip code where these sales took place would show up in reporting somehow, that would be great for my sales and use tax reporting.