Austin Bookkeeping CompanyThe transit slice is not profit

On a taxable sale in this city the card is charged 8.25 percent. The state keeps 6.25. Of the local two points, one point stays with the city and one point is the transit authority's. The city receives 1 percent. Capital Metro, the transit authority the Comptroller lists as the Austin MTA, receives the other 1 percent.

Capital Metro has run bus, rail, and bikeshare in the region since 1985. That history is why the extra percent exists. The extra percent rides with the sale and is owed onward. It never stays in the shop's profit.

If the bookkeeping records the full card batch as sales, profit is overstated by both local percents. The month looks healthier than the cash you may keep. We split the batch in the month it landed.

The merchant deposit hits the bank as one number. The report from the card company is the map. Sales in one column. Tax in another. Tips, if you have them, in a third, because a tip is not a sale either.

Collected sales tax sits in a liability account from the day of the batch until the Comptroller payment clears it. The payment to the Comptroller then clears that liability. A month that still shows the tax inside income is not ready to read.

Different rates can apply when a sale is shipped or when a buyer is exempt. We do not flatten those into the city rate for convenience. An exempt sale that was taxed by mistake is fixed in the month, with the refund or the credit written down.

Every Texan understands paying a little extra on a receipt and knowing it is not the shop's money. A Dallas receipt with a little extra on it taught the same lesson, and this city's extra point carries Capital Metro's name. The percent with Capital Metro's name on it is the city's version of that feeling.

The wink is the books. When you see a bus or a train, you see the service. We see the liability that has to leave profit before the month is honest. The close is finished when that percent is no longer wearing a sales costume.

You may already file the sales tax return, or a provider may file it. Either way, the books have to match what was filed. A return that remits one number and a ledger that kept another will meet at the worst time, which is a letter from the state.

We reconcile the liability account to the returns for the quarter. Differences are named. They are not plugged. A plug is how a small transit percent becomes a mystery in December.

A normal week can hide a sloppy tax code. A festival week cannot. The batch is bigger, the exempt questions are messier, and the deposit looks like a victory until the percent comes out. March and October are when this split earns its keep.

We would rather you see a smaller, true March than a large March that still owes the transit authority. The smaller number is the one you can hire from and the one the return can stand on.