Hey @CColotti. That’s definitely an issue and I understand your problem here. But, this is one of those times where I have to say something that is never completely satisfactory.
Quickbooks Online is a third-party developer that integrates with Square. As such, Square’s only responsibility here is to provide the APIs for QB to use to import data from Square. Once that data is in QB’s servers, what happens to it is entirely on QB, not on Square. Honestly, QB should just accept the tax as Square gives it to them. If, however, they are recalculating sales tax then this is on them and they must make the appropriate changes or give you the appropriate settings to recalculate sales tax correctly.
I’m assuming from your post that the sales tax Square is calculating is correct according the laws of your state/taxing jurisdictions. If that is the case, QB is the problem here. Square can not be responsible for forcing QB to do the right thing here. They are providing QB with the correct information. That’s as far as they can go.
As you said, I can’t believe this is a new issue, so I’m betting that if you talk to QB (sorry, I know their customer service sucks) they will direct you to settings (either for the Square importing or for their own internal sales tax module) that make this happen correctly. If it is related to their new auto-tax calculations, then you’ll need to have them look into it and file a bug report or two. I doubt that you will be the first customer to do so.
Sometimes the worst part of having two software companies “talking” to each other via APIs is this very thing. Sometimes they both point fingers or blame at each other and it’s hard to tell which is correct. But, in this case, there is no doubt. If QB’s calculations are different than Square’s, and if you have verified that Square is indeed doing the correct calculations, then the fix must come from QB.
In any case, I wish you the best in getting this resolved, quickly.
"then the fix must come from QB.".....this is actually the reverse. Square is using the wrong field plain and simple, so it's a Square fix. Square dictates via the API which field to assign discounts too and they are doing it 100% wrong...so it's not at all a QB issue..read on and see the simple proof.
Below is EXACTLY how Square data is imported into QB Online, Zero modifications by me..
Subtotal is LOWER than Taxable Subtotal...Incorrect. Taxable subtotal with discounts should ALWAYS be lower than the subtotal b/c discounts are not part of the taxable equation....except they are right now.
Note if the DISCOUNT field is used that is in line before Tax (visually but also in top to bottom calculations) then Compare the difference in Tax calculated when the discount is put in the proper field...
Below is me simply removing the original line item and inserting the discount value into the proper field.
Subtotal is HIGHER than taxable subtotal....which is correct, discounts are removed from the tax calculation.
$23.08 in tax vs $23.79. Not expand that to hundreds of sales receipts and weeks of sales. This is 100% a Square bug by sending the discount data to a line item in the sales receipt instead of the properly available "discount" field. I have seen this with other vendors too the do this with discounts and even shipping. They are not using the proper fields to allow calculations to run correctly.
This is an easy fix..Square needs to use the correct DISCOUNT field for the data import not a line item as they are currently doing. There is a correct field and API to use it, they are just not using it. The API call from square determines the field to send the data too, in that case QB has nothing to do with moving the data between fields. The API square is using needs to be adjusted to use the right field...I can't say it enough.
In the meantime, many like me may have to MANUALLY adjust these discount numbers for thing to be correct. I also found this and had to go back 4 months with my TN sales tax returns to correct them as the QBO numbers were HIGHER than I actually collected at the register when compared to the Square sales reports. So while this is an integration...this is an integration data feed issue on Square's side.
Check your imports!
PS I spent 25 years in IT finding bugs like this in software....The challenge is getting someone to fix it...
okay I guess I stand corrected...looks like the Square app is written by Intuit and the mapping is specifically to a LINE ITEM...
In that case it could still work if the line item's TAX checkbox is "Ticked" so I will also inquire on the intuit side.....my gut tells me it's easier to just keep manually editing all the imports..
I can only answer one of your questions here. Quickbooks is connecting to Square importing raw data from Square using Square’s APIs. Square’s APIs define each field in the returned data so that the third-party can decided how to map each field into their software. After Square has populated the returned data stream per the API definitions that Square set up, whatever happens with that data once QB receives it is entirely on QB.
Having said that, there may be some confusion on QBs part as to how you calculate sales tax. Square gives us the capability to charge tax on the entire amount (pre discount) as well as to calculate it on the discounted amount. Every taxing jurisdiction is different.
I wish I could count the number of times I said that last sentence, @CColotti. Not just about software, either, but things in general when one is an entrepreneur.
If I may offer an alternative for the automation side of things. I use a third-party app app call Bookkeep. They do the daily task we call “revenue accounting,” which is basically creating journal entries that summarize our daily sales, deposits, transfers, etc. I use it because it integrates with my accounting software Zoho Books, which I prefer over all the rest of them!
Anyway, I’ve used it for a few months now and have thoroughly enjoyed it. It does cost a monthly subscription, but it is more than worth the cost, IMO. If you want to give it a try, I have a link to a referral code in my signature box that will give you a month free instead of their standard 14-day trial. Also, my inbox is always open to answer questions about it.
Best,
@CColotti I’ll add one more thing about Bookkeep. It gives us TOTAL control over how our numbers are mapped into our accounting software. And they have exception reports to help us figure out when something is wrong with a day’s postings. But my favorite part is that I have a backup card processor (Stripe) for when Square goes down for any reason. And I also use Bookkeep to automate the revenue accounting with that. It helps me sleep better to have a backup card processor AND to have that integrated so I don’t have to remember how to book entries from it when it is needed.
