Montana is sales tax free. If I invoice a buyer in California, does Square take out their taxes?

[Young1sLLC]

I am contemplating invoicing a buyer in California with Square but I wonder if I would be better off using Etsy, because they take care of the CA sales tax.  Any advice?  Doreen

[isabelle]

Hey @Young1sLLC-

Take a look at this Support Center article on taxes with Square Online. It should answer any lingering questions about our process, and help you make a decision. 

Please let us know if you have any additional questions! 

[Young1sLLC]

Thank you, Isabelle - I read your article. I understand there is set up that needs to be done.

I was wondering how the tax it paid.  We have no sales tax in Montana.  I understand when I ship to another state, square will charge my customer sales tax.  My question then is, how is the sales tax paid?  Does square send the taxes collected to the shipped to state?  

[isabelle]

Hey @Young1sLLC! Thank you for your reply 🌻

Square does not pay the taxes. They are collected by you, and we provide reporting so you can see how much of the transfers/deposits you've received are from taxes.

At the end of the year, we'll provide you with a 1099k based on your years earnings, and then it's up to you to file your taxes. I hope I haven't misunderstood your question. Let me know if I have! 

[Ben-in-SF · Accepted solution]

California does have a sales tax, but you, in Montana, would not need to collect tax for an out-of-state sale. At tax time (in theory) the CA customer will self-report and pay CA the equivalent amount as "use tax" for any items they purchased out-of-CA.