Sales tax on pens sold? - Woodworking Talk - Woodworkers Forum
 
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post #1 of 7 Old 04-28-2011, 01:00 PM Thread Starter
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Sales tax on pens sold?

I'm curious if those of you who sell your pens collect sales tax. I work in an office that sees between 50 and 60 people a month come through the doors, so I'm thinking about setting up a small display to sell pens. But I don't know if I should (must) collect sales tax.

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post #2 of 7 Old 04-28-2011, 01:05 PM
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Kind of depends upon a number of factors. How honest are you? How many do you sell per year? Do you sell other items? Do you have a business license? Do you claim losses from your woodworking against your taxes?

I am a sole proprietor selling my work at craft shows, holiday bazaars and local shops. I collect tax on what I sell, but to simplify things at craft shows and such, I price my items "Tax included" and then settle up with the state at the end of the year.

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post #3 of 7 Old 04-28-2011, 02:24 PM
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You could always move to Montana, no sales tax there to worry about.

It would take some research, but I know the IRS has a limit of how much you can sell personally before you are considered a business, and your state revenue service would probably be able to answer that question for the state in which you live. It's similar to selling stuff at a garage sale, craigslist, or on ebay, you don't collect any sales tax there because it's a sale of personal property, not business sales. I think sometimes it falls into a murky area depending on the volume of sales, but I have no real experience in moving that kind of merchandise.

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post #4 of 7 Old 04-28-2011, 02:46 PM
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I am in the position that, in order to be able to recoup a certain amount of my costs, through tax deduction, I am required to collect state sales tax on sales in-state.

I, too, generally will include the tax cost in the price for informal sales to friends and colleagues...

At the level that I do "business", it's not a large sum that I send to my state comptroller every quarter.

The income from profit is a non-issue at this point.

The key is to keep good records.

As an aside, I formed an LLC several years ago, for unrelated reasons, and recently applied for a state business license.

Good luck!

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post #5 of 7 Old 04-28-2011, 03:24 PM
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Quote:
Originally Posted by sawdustfactory View Post
Kind of depends upon a number of factors. How honest are you? How many do you sell per year? Do you sell other items? Do you have a business license? Do you claim losses from your woodworking against your taxes?

I am a sole proprietor selling my work at craft shows, holiday bazaars and local shops. I collect tax on what I sell, but to simplify things at craft shows and such, I price my items "Tax included" and then settle up with the state at the end of the year.

I do exactly the same, but I sell at gun shows. To collect the nickle dime change etc would be a hassel, but I do accept charge cards and all charge card purchases I figure taxs. In fact you can collect taxes automatically when you set up the reader. I use intuit business services and purchased a blackberry phone with a card reader from intuit free of charge. If you already have an iphone you can do the same thing. This also increases sales. I can enter sales manually and/or with the card reader. If you want any other particulars PM me.
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post #6 of 7 Old 04-28-2011, 05:22 PM
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Many community colleges offer business seminars for entrepreneurs/craft people at no or low cost. Most cities require you to have vendors license. Your state has statewide and district sales taxes.

Better to collect sales tax and pay it, then get caught not!

Obtaining A sellers Permit
http://www.boe.ca.gov/pdf/pub73.pdf

Who must obtain a seller’s permit?
You must obtain a seller’s permit if you:
Are engaged in business in California, and
Intend to sell or lease tangible personal property that would ordinarily be subject to sales tax if sold at retail.

Sales & Use Tax Publications
http://www.boe.ca.gov/sutax/staxpubsn.htm

If you sell one pen for $20 you owe the state $1.65, if you live in one of those districts that add to statewide sales tax better collect and pay that too!

Check out pub 75
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post #7 of 7 Old 04-28-2011, 06:42 PM Thread Starter
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Thanks to you all! Some really good information. I appreciate it.

I definitely want to be on the "up and up", so it looks like I have some research to do.

Gakkuri
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