Solved: How do I adjust item pricing for tax-exempt organi...

flyleaf_bakery · ‎07-25-2022

My business currently uses the Include tax in item price feature to set our prices to round to even dollar amounts.

But when I ring up tax exempt organizations and toggle tax off, the prices are still rounded to the even dollar. So a $10 order rings up as $10 regardless of whether I toggle tax on or off. Square should automatically adjust the item prices to reflect the removed tax, but it doesn't.

As a work around, I'm considering using a percentage discount...

Our sales tax is 8%, should I create an 8% discount and apply it to all tax exempt organization orders, and also toggle the tax button to off? Is there a better way to do this?

Will that sale then be recorded as "non-taxable item sale" when I pull up the Report's Taxes tab? Or will that sale still be included in "taxable item sales". The Taxes Reporting tab should really have a better breakdown to include tax exempt organization sales.

TheRealChipA · ‎07-27-2022

@flyleaf_bakery So, I did some research here, to confirm what I suspected. I was going to include links to a few other threads on this subject, but they all go off on so many tangents that I’m afraid they will confuse you like they confused me! 🤣. Rather than do that, here’s a summary.

You are almost correct with the discount portion of your work-around. Here’s what I mean.

Item Price (including tax) = $10.00

Actual Item Price @ 8% = 10 / 1.08 = $9.26

Sales Tax = $0.74 ($9.26 * 0.08)

IF you give an 8% discount ON THE ORIGINAL PRICE, you are actually discounting too much, and losing a little money. It’s not significant, though, and probably not worth worrying about unless you have really high ticket averages! A closer discount would be 7.4%, but you might not be able to explain that to your customers!

One more thing. Giving this discount will NOT fix your end of period sales tax returns. You will have to add one more step to ringing up tax-exempt sales. That step will be to touch on the “Sales Tax (Included)” line on the sale and hit the red minus sign to delete the sales tax from the sale, as well. This will have the effect of marking that sale has tax-exempt sale so that you don’t end up paying sales taxes you did not collect (at least I think that it will). Note that removing the sales tax line from the sale will NOT back out the sales tax from the price. It only marks it as a tax-exempt sale. So you still need the discount to keep the customer from paying it. Personally, I think that when you remove sales tax from a tax-included sale it should change the item price. But from what I read in my research, Square either doesn’t agree or doesn’t consider it enough of a priority for the roadmap. Regardless, you can at least do what you want with the two steps I’ve mentioned — yours plus my extra step.

Let me know if all of that makes sense!

Chip

If my answer resolves your issue, please take a minute to mark it as Best Answer. That helps people who find this thread in the future.

Piper’s Ice Cream Bar, Covington KY USA
Website
Facebook
Click here to see a list of third-party apps I use to add functionality to my Square account!

जो है सो है

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TheRealChipA · ‎07-27-2022

@flyleaf_bakery So, I did some research here, to confirm what I suspected. I was going to include links to a few other threads on this subject, but they all go off on so many tangents that I’m afraid they will confuse you like they confused me! 🤣. Rather than do that, here’s a summary.

You are almost correct with the discount portion of your work-around. Here’s what I mean.

Item Price (including tax) = $10.00

Actual Item Price @ 8% = 10 / 1.08 = $9.26

Sales Tax = $0.74 ($9.26 * 0.08)

IF you give an 8% discount ON THE ORIGINAL PRICE, you are actually discounting too much, and losing a little money. It’s not significant, though, and probably not worth worrying about unless you have really high ticket averages! A closer discount would be 7.4%, but you might not be able to explain that to your customers!

One more thing. Giving this discount will NOT fix your end of period sales tax returns. You will have to add one more step to ringing up tax-exempt sales. That step will be to touch on the “Sales Tax (Included)” line on the sale and hit the red minus sign to delete the sales tax from the sale, as well. This will have the effect of marking that sale has tax-exempt sale so that you don’t end up paying sales taxes you did not collect (at least I think that it will). Note that removing the sales tax line from the sale will NOT back out the sales tax from the price. It only marks it as a tax-exempt sale. So you still need the discount to keep the customer from paying it. Personally, I think that when you remove sales tax from a tax-included sale it should change the item price. But from what I read in my research, Square either doesn’t agree or doesn’t consider it enough of a priority for the roadmap. Regardless, you can at least do what you want with the two steps I’ve mentioned — yours plus my extra step.

Let me know if all of that makes sense!

Chip

If my answer resolves your issue, please take a minute to mark it as Best Answer. That helps people who find this thread in the future.

Piper’s Ice Cream Bar, Covington KY USA
Website
Facebook
Click here to see a list of third-party apps I use to add functionality to my Square account!

जो है सो है

Anthem · ‎07-27-2022

I get your logic but this would work the way you want it to. I'll over-simply for ease, and to avoid getting lost in the weeds. Hopefully, the point will come across. A discount of the same percentage as the tax won't result in the same dollar amount collected. Example:

adding 8% tax to $10 purchase - $10 + 8% tax = $10.80 (tax = $.80). You collect $10

An 8% discount on $10.80 purchase - $10.80 - 8% ($10.80 - $.86). You collect $9.94

You'd be leaving yourself short.

Take care of yourself and, as life provides, someone else too.

How do I adjust item pricing for tax-exempt organizations when using "Include tax in item price"?