How do you report taxes? When the funds hit your account? Or based on the dates of the stay, which will usually straddle the start/end of a taxing period?
With direct bookings I get the fees before the stay, but with VRBO they come after the stay. Or maybe there is a deposit around the start of the stay, have only done a few so far.
Seems like it would be easiest to pay them based on date funds are received into your account.
Also - for the purpose of calculating the taxes owed are you using OR reports? Or Quickbooks reports? I suspect it would be easiest to track using Quickbooks, in which case the OR reports would be nice for managing the business, but irrelevant regarding your tax position.
This all depends on your locality and to some extent how you set up the business (cash vs accrual etc). Many taxing authorities give you the option to choose when you report (date booked, date of payment, date guest departed) as long as you stay consistent. Check with the taxing bodies in your area and see what you can do.
If you can go based on arrival or departure date, I'd highly recommend that -- makes tracking much easier because you don't have to send in a bunch of half payments for each booking and figure out which ones you paid, and back out anything for cancels/refunds.
Some folks will use the Tax report we have in OwnerRez, others go by QuickBooks. It depends on the level of data you have in each. If you fill OwnerRez with all of the data we can give a better report with vacation rental specific stuff like # of nights booked, perhaps rent vs. different non taxable items etc. This is actually our main focus area for development right now -- getting the numbers correct in OwnerRez and then being able to sync those across to QuickBooks etc.
Thanks - when I started experimenting with the reports I couldn't get to the underlying data with enough granularity to convinced myself what was being shown.
I read in one of the forum responses here that OR isn't trying to be an accounting system. For me, I think that's a good approach.
After thinking more about all this I decided to NOT track based on arrival or departure, but instead to use the date funds are received. To me it's not a huge issue if I pay sales tax on funds received in 4Q2018 for a 1Q2019 visit. If that visit gets cancelled in 1Q2019 it will just show up as negative funds received and offset other taxes. Filing amended returns would be a huge annoyance, sure, but I can't see how any tax authority would have a problem with this approach. And I prefer to have my accounting rely on my bank account, where I can 100% trust posting dates, unlike OR where arrival/departure dates can be modified. So the answer I get today (when paying taxes) could be different than the answer I get 3 years down the road when I'm being audited ;-)
I imagine I'll be using OR reports primarily to keep the pulse on my rentals, but I'd like look forward to being able to 'click into' any value in a report to see the underlying line items. Quickbooks allows this and its essential, for instance when doing a class report its common to see unclassified or unexpected expenses. Clicking on them brings up a line item report where things can be modified. This goes a long way towards building confidence in QB reports and I think OR would benefit from the approach.
In Indiana where we are located we're supposed to pay the sales tax and innkeepers taxes when those amounts are no longer refundable to the guest.
Our current policy is 50% due at time of booking, 50% due 30 days prior to check-in date and no refunds within 30 days of check-in date (50% refund if canceling more than 30 days out). So I'm not sure how to run a report showing what taxes we owe to our locality in OR based on the current filters/settings.
If a guest makes a ($1000) reservation on April 1 and has to pay $500 (50%) at time of booking and their stay starts on July 15th (check-in date).
OR collects the remaining $500 on June 16th (30 days before check-in). I have to pay the taxes on the entire $1k during the month of June (because that is when all of the payment (both the one from April 1 and the one collected on June 16) are no longer refundable. Not really sure how to run a report showing what we have to pay taxes on for each month.