Personal Company

[Cattlegod]

Say you sell stuff from a company (B&M or Online) and you charge sales tax. Do you just have to keep track of all your sales that you charge taxes on and at the end of the year fill out some column in a tax form?

Seems like a lot of cheat if that is the case.

 

[lobadobadingdong]

elmer fudd

be verry verry carefull.

keep clean books, many areas require quarterly taxes at certain sales levels. Also don't forget Social Security, City and County taxes, etc.

 

[DaveSimmons]

States make a lot of money auditing people who think like that, then collecting heavy penalties / fines, back taxes and interest.

 

[tcsenter]

Say you sell stuff from a company (B&M or Online) and you charge sales tax. Do you just have to keep track of all your sales that you charge taxes on and at the end of the year fill out some column in a tax form?

Every state that I know of requires that it be done quarterly. And yes, you could cheat and risk getting caught, but there may be a legal way to keep some of the sales tax.

Michigan offers a way for businesses to legally keep up to 50% of all sales tax it collects as an incentive program. By paying estimated sales tax collections in advance, the business gets a discount on the sales tax remittance rate. For every quarter of estimated sales tax paid in advance (IIRC, a maximum of 4 quarters), you get a larger discount, up to a max of 50%. A business can legally keep 50% of all sales tax it collects, if it pays enough quarters in advance.

I assume at least a few other states offer similar incentive programs, but that is just an assumption.

 

[Orsorum]

Which state are you in?

 

[alm4rr]

discount in VA is based on total $$ and is a whopping @ .0345
big deal since it's the business that does all the work and eats the credit card % fee with the added state's tax on it too

 

[JulesMaximus]

Originally posted by: lobadobadingdong
elmer fudd

be verry verry carefull.

keep clean books, many areas require quarterly taxes at certain sales levels. Also don't forget Social Security, City and County taxes, etc.

Sales tax has nothing to do with Social Security, City and County taxes... that's for paid employees. Hell, even if you have independant contractors all you have to do is file a 1099 and mail a copy off the your vendors. You don't have to deduct taxes.

 

[Cattlegod]

Originally posted by: Orsorum
Which state are you in?

Michigan

 

[Orsorum]

Originally posted by: JulesMaximus

Originally posted by: lobadobadingdong
elmer fudd

be verry verry carefull.

keep clean books, many areas require quarterly taxes at certain sales levels. Also don't forget Social Security, City and County taxes, etc.

Sales tax has nothing to do with Social Security...

Correct. Two totally different areas of business taxation.

 

[Orsorum]

Originally posted by: Cattlegod

Originally posted by: Orsorum
Which state are you in?

Michigan

* What corporate entity are you a part of? I'm assuming a sole proprietorship. (just out of curiosity, for the most part, I don't think it plays a huge part in determining sales and use taxes)
* What kind of merchandise are you selling?
* What are your total annual (expected) sales?
* Are you providing services as well?
* Are you selling solely to in-state residents or are you crossing state lines with your sales?

All of these help to determine if and what kind of sales and use taxes your business may be required to collect and remit.

Oh, and basically, here's a link to check out before you ask any more in-depth questions.

 

[Cattlegod]

* What corporate entity are you a part of? I'm assuming a sole proprietorship. (just out of curiosity, for the most part, I don't think it plays a huge part in determining sales and use taxes)

Would be sole proprietorship (so far anyway).


* What kind of merchandise are you selling?

Would be small items, maybe some niche market or toys of some sort. Not sure yet, might even be stuff I make myself.


* What are your total annual (expected) sales?

No clue at the moment.

* Are you providing services as well?

No warranty service. Maybe RMA or something eventually. Obviously the basic customer service that any company offers (not sure how i'm going to fund this initally though)

* Are you selling solely to in-state residents or are you crossing state lines with your sales?

I would like to cross state lines. Would going to Canada be much of a problem?

 

[tcsenter]

If you apply for a sales tax exemption permit, you will be asked to provide your monthly sales, estimated or actual. What this information will be used for is not explained, but I will tell you.

Every quarter, you will receive a freaking BILL from the state for sales tax and it is based on this figure. So if you put-down that your estimated monthly sales will be $10,000, and the sales tax rate is 6%, you will get a freaking quarterly BILL for $1800.

The state is always pleased to get more revenue than it expected, but it hates to get less than expected. So if your monthly sales are actually $1000, prepare to justify to the State of Michigan why you only sent them $180 instead of the $1800 you 'promised' to pay. I learned this the hard way.

I had no idea what my sales would be, because I had not actually started my business yet, nor the reason I was being asked. So I just put down some number that I made up, figuring it was just something they always ask. I think I put down $10,000 per month estimated sales.

I didn't have $10,000 in sales the first six months combined, but the State of Michigan sent me that $1800 bill like clockwork every quarter, and of course I had to file additional forms explaining why I was sending them something significantly less than $1800.

So if you apply for a sales tax license, put down some low-ball figure like $500 per month estimated sales.

 

[delroy]

I know that if you are into PPC, and use adsense, Google have a form that auto generates info for you to take to you accountant