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Sales and use tax question - any experts here?

D

ddeder

Golden Member
I am starting a small computer repair business in Minnesota. I am incorporated and have a tax id number. My question is this:

I do not pay sales tax on items I buy which I intend to resell. When I sell an item, I charge sales tax which will be turned over to the state of Minnesota. If, at the end of the year, I have an inventory of items which I have not yet resold and I have not paid sales tax, am I required to pay use tax on these items (even though I am not "using" them and intend to resell them sometime in the future)? If I do have to pay a use tax on these items in inventory, does that mean that I do not charge sales tax when I sell them in the future?

Also, is this legal:

I pay $100 for a printer but pay no sales tax since I am exempt
I sell the printer for $80 and charge the customer sales tax on that amount
I charge the customer $50 for labor for setting up the printer
total $135.20

I take a loss on the printer but make up for it with a higher labor charge. This saves the customer paying a higher amount for sales tax.

Otherwise I would have charged the customer $100 + sales tax and $30 for labor - total = $136.50
 
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