Stay Square and Avoid the CRA Sniffing Around Your Books!
Well, this was inevitable, and true to the saying, all it takes is one bad apple to spoil the bunch. Although in this case, we’re sure it was several bad apples.
If you haven’t already heard, the Canadian Revenue Agency (CRA) has launched a probe into retailers using the popular Square payment processing system. But before you start screaming “That’s an outrage!”, let’s take a closer look at what the CRA is actually doing.
What the CRA (and other tax agencies) are doing
For those who don’t know what Square is, it’s a small square device that can plug into your phone or tablet and you can accept credit cards as method of accepting payments. Put another way, it’s a simple, mobile “point-of-sale” system (POS).
Now, what CRA is doing is they are targeting users/businesses who have sales over $20,000, and from there, confirming that they are remitting the correct Sales Tax owed to CRA. This shouldn’t come as a big surprise.
If you’re a Square user and are remitting your sales taxes based off what you sell using Square, then you have nothing to worry about because you are being a good law-abiding citizen.
But for those who aren’t, well, prepare to be probed.
These probes aren’t anything new
If you’re an online retailer using eBay or Amazon (either associates, or Kindle Direct Publishing/KDP for example), then what CRA is doing shouldn’t seem like earth-shattering news. If you sell to the US, Amazon automatically deducts tax amounts unless you state otherwise in your Amazon tax setup.
And if you’re a Canuck thinking the CRA is just out to get another buck, well, tough luck, because the CRA isn’t the only tax agency cracking down. In addition to Amazon’s automatic tax deductions, Britain’s HMRC has been cracking down for a few years now, and PayPal is another payment processor that has this very same caveat as Square, allowing them to send your information to the IRS for sales over $20,000.
When you sign up for these payment processing systems and online retailers like eBay, Amazon, or even Etsy, their user agreement states that they cooperate with taxman, whoever they may be.
Don’t get bitten by the CRA!
Let’s face some facts; nobody wants their tax agency sniffing around, but the fact is, it’s almost inevitable. You can’t fight it, but what you can do is be prepared by tracking your sales (and all applicable taxes) in a reliable accounting software program, like Kashoo.
Remember, the sales tax you owe Mr. Taxman is based on the sales tax you received on sales Income less the sales tax you paid on eligible Expenses. Once your income and expenses are entered into Kashoo, this amount is figured out for you effortlessly. Add to that, you can record those remittance transactions with the click of a button.
Kashoo is hound friendly
Our focus is and always has been to develop simple accounting software, and tracking sales tax is a feature we strive to make as easy as possible. If you’re using Square as your POS system, or receiving payments some other way, while we can’t guarantee you won’t get hounded by Mr. Taxman, we can make the difference between a happy hound and an unpleasant one.
Originally published at www.kashoo.com.