Accounts Receivable included in Gross Sales?
I am trying to determine my sales tax.
In a given quarter, let's say I close a deal for 00 and collect 0 as a deposit. Which number is considered in my "Gross Sales", the 00 or the 0? It doesn't make sense for me to be paying sales tax to the state for money I haven't received, so I am assuming/hoping the answer is 0.
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0, this is called "cash basis" accounting. A large company might handle it otherwise, counting shipments/billings as revenue. Not you. Yet.
It depends on if it is a non-refundable deposit, retainer, etc.
The remaining ,500 is not included in that quarter's sales, because you have not yet received it and it is not guaranteed.
The question is really if you should count the 0 toward the quarter where it is received, or during the quarter where you invoice. This deposit might be categorized as a liability until you invoice, and there is no sales tax to be calculated until the invoice for the total.
I say 'might' because this can vary by state and the type of transaction or business. For example, if someone makes a cash down payment on a lease for a car, some states will require that sales tax be charged on this.
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