Financial Cluster:Sales and Use tax
Sales and Use Tax is due every quarter for the Bike Kitchen. We file and pay online. Paypal does not generate reports for the previous month until after the 2nd of the month, so you will need to wait until the 3rd of the month to complete the taxes for the previous quarter
We should be collecting Sales Tax for all real goods we sell, including new parts, used parts and Digging Rights (which is essentially a repackage of used parts). We need to calculate our total sales, including things we don't collect and pay taxes on. So we need to include Memberships, Classes, Day Use fees, etc. We do not need to include Donations.
Use Tax is for items purchased online which we do not resell and do not include sales tax. Mostly this will be QBP Tools and Consumables which we do not resell.
To calculate our Sales and Use Tax:
- Download a Square "Category Sales" Report in CSV format
- Remove the Donations Row
- Sum up the Sales Tax Collected and enter that into the form
- Sum up all Net Sales. This is our Total Square Sales and should not include Sales Tax Collected
- Enter the Net Sales for Membership category as a deduction "10(f) Membership: upfront admission fee for 1yr, no other benefits"
- Sum up the Net Sales for Day Use and Cutting Tools as a deduction "10(f) Fees (all except Membership)"
- Generate a Paypal Statement for the quarter. Class sales should be already summed up as "Express Checkout Payments" in "Payments Received". Enter this as a deduction "10(f) Educational classes that do not include tangible goods sold". Also, add this to Square Sales and enter this is our Total Sales for the quarter.
- Find all receipts for online purchases such as QBP Tools, QBP Consumables and Amazon orders and sum up all untaxed items. Enter this into the Use Tax
When Sales Tax percentages change, we have to manually change them in Square. All Sales happen in the City and County of San Francisco, so we only need to enter one sales tax number.
