MMA Life Ronda Rousey Fought Chael Sonnen? Sonnen Tells the True Tale – YouTube Video Update

Ronda Rousey Fought Chael Sonnen? Sonnen Tells the True Tale – YouTube

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Improperly deducting credit card processing fees paid on sales tax at year-end can be a costly mistake. Sales tax can have a significant impact on merchant account fees that many merchants who do their own business taxes fail to consider. Card-present merchants that pay tax on the majority of their credit card transactions can be particularly affected by this issue.

When a merchant processes a credit card transaction, the customer’s credit card is charged for the total amount of the sale. Transactions aren’t divided into sale amount and taxes. In a retail environment where sales tax is paid on almost every transaction, the increased processing fees can amount to a substantial yearly expense.

For example, if a retail store has a monthly processing volume of $15,000, pays an average discount rate of 1.9% between qualified, mid-qualified and non-qualified fees, and their state’s sales tax is .06%; $171 of the yearly credit card processing fees would be a direct result of sales tax.

There’s not much that can be done to rectify this issue at the point of sale. The logistical obstacles involved in creating a system to accurately divide transactions into sales amount and taxes and only apply the discount fee to the sales portion of a transaction make the prospect all but impossible.

If such a system were to be attempted, merchants would either be allowed to divide transactions based on the honor-system prior to authorization, or processing banks would have to perform the additional task of deducting sales tax from a merchant’s gross processing volume prior to settlement.

The reasons are pretty obvious why allowing merchants to declare sales tax just won’t work. Abuse with such a system would run rampant and processing banks would see their profits decline sharply. The second option of modifying the settlement process is more feasible than the first, but not by much. The logistics of actually creating an accurate and efficient system are significantly restricting.

Creating a system to handle sales tax really isn’t necessary in the first place. Tax professionals are very accustomed to dealing with credit card processing expenses and accountants know how to properly declare sales taxes and processing expense deductions. Losses most often occur when thrifty merchants decide to handle their own tax preparations. If you’re one of these do-it-yourselfers, enlisting the help of a certified accountant may be something to consider once you start accepting credit cards.

Proper accounting is the best way to deal with sales tax on processing fees, but for there is a way to handle this issue at the register by passing a portion of credit card processing fees equal to the percentage of sales tax that you pay along to your customers. By doing this you can essentially shift the burden of expense to your customers. Card brands forbid surcharging credit card transactions. The legitimate way to pass credit card processing fees to customers is by offering a discount on cash transactions. The details of how to do this are beyond the scope of this particular article, but there are a couple very good articles at that cover this topic in depth.

Whenever you adjust your pricing model it’s important to track the affects such changes have on your cash flow. Passing a portion of processing fees to your customers may hurt your income more than it helps, especially if sales decrease because of customer dissatisfaction with your new policy. This may or may not be the case, so track customer behavior carefully and be prepared to eliminate new pricing policies quickly if they prove detrimental. It’s probably best to avoid the issue all together and be sure that your properly handling sales tax and processing fee deductions come tax time.

Ronda Rousey Fought Chael Sonnen? Sonnen Tells the True Tale – YouTube

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