How are users of Shopify POS determining the correct amount of taxes to pay from the "Sales Report"
For example, if you do an order that has a partial payment Shopify treats it as a Sale. I realize I can look at the "Payment report" and see money collected but from that report, I do not know if the money received was for taxable items or not. And the "Sales Report" shows the total tax for the Total of the Sale (but in reality, I have not collected those funds yet because it is a partial payment or layaway.)
So anyone who is using Partial payments with Shopify how are you determining how much tax is owed to the "State" and "County." from the reports.
Really need some help with this.
All past POS systems i have used treat a layaway as a liability and places the items "on-hold" (removing form inventory) until paid in full then the correct taxes can be paid to the "State" and "County because the order is now really a completed sale once paid in full.
We do about 50 partial payment/layaway orders a month.
For example, if an order is $1000 the tax would be 7% or $70. If the person made an initial deposit of $100 and it takes them 8-10 months to pay in full it would be a gamble for me to go ahead and pay the taxes for the complete order amount ( we pay taxes each month) Because the person may decide not to get the item. So let's say I paid the full taxes $70, and let's say they made a total of $500 in payments, and they decide not to get the layaway, So I issue them a refund of the amount they paid $500 in cash or Gif-Card. That means I have paid $70 in taxes for no income received.
This is a great discussion regarding partially paid. We sell custom furniture with a 10-12 week lead time. We take 50% up front and the balance before delivery.
Here's what we do for the state of Colorado (USA):
1. Because shopify takes the sales taxes based on the complete order, we pay from the shopify reports, in the month that the order is placed.
2. In our accounting system (Xero), the deposit is placed in Customer Deposits Account, and the transaction is converted to a quote.
3. When the customer pays the balance and receives the furniture, the quote becomes a transaction, and we book the sale.
It's been three years and the system seems to be working.
Any other calculations about paying partial tax was super complicated, and required specialized reporting which doesn't exist in shopify. So the time and headache of tracking and reporting easily wiped out any savings.
I'm not an accountant, nor am I a tax expert, but this is the system we came up with. It's been 4 years, so I believe things are still ok.