2024 Taxes

[alvilla56]

I will be starting a new business next year (2024), planning on using Square as my point of sales. Do I have to charge taxes (CA) on every transaction and how will Square report income to the IRS, Is it in the form of a W9?

What if I don't charge taxes?

[Anonymous_]

See https://www.cdtfa.ca.gov/taxes-and-fees/sutprograms.htm

If you are selling merchandise in the ordinary course of business, you are going to be required to collect sales tax.

[MelanieCPA]

Hi @alvilla56 ,

Congratulations on starting a new business!  A point of sale solution like Square is a great way to get paid and capture your sales.  

Retail sales of tangible personal property in California are generally subject to sales tax. Examples of tangible personal property include such items as furniture, giftware, toys, antiques, clothing, etc.  As the seller, you will owe the sales tax to the state.  As the seller, you are allowed to collect this sales tax from your customer in addition to the price of the item you are selling.  You can itemize the sales tax a separately or include a disclosure that the price of the item includes sales tax.

Here is a great FAQ on California state sales tax:

 https://www.cdtfa.ca.gov/taxes-and-fees/applying-tax-sales-purchases-faq.htm#:~:text=What%20is%20tax... 

At the end of the year, Square will provide you with a Form 1099-K listing your monthly sales, assuming you meet the minimum sales requirements.  This information will also be provided to the IRS.

Thank you!

MelanieCPA