Charging sales tax in VA

[sarahcycled]

This summer, VA increased their sales tax to 5.3% . Before this, I had been including sales tax in the price of a bar( $5). It's cutting into my profits more now. I'm wondering if I should start adding on sales tax (so a $5 bar would cost $5.27). How many if you do this already?

Also, if I start adding on tax, I guess ill have to haul around much more change. How much extra change in coins should I get if I normally get $50 in 1s and 5s for a farmer's market?

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[DeeAnna]

Adjust your price to $5.25 per bar and you'll only need to add quarters to your cash box. I'd bring a couple of rolls of quarters, maybe?

 

[innerdiva73]

You may need to calculate it separately at your POS. I have my business as an LLC as I am registered as a business so I have to collect 7% at the POS (point of sale) of each transaction and the sales tax collected is "technically" the county's money

If you do not have a business presence in your state , then that is a different issue. Here is an article from the SBA that may help.

http://www.sba.gov/community/blogs/community-blogs/small-business-cents/sales-tax-101-small-business-owners-and-online-

 

[Walt H]

Hi,

I saw your post and I was wondering which decision you made. I too include the sales tax in the price and back it out to pay to the tax office.

Perhaps you can help me understand better how the .3% increase in sales tax is eatting into your profits. I don't think I understand the issue.

For example, at 5% (the old tax), on a $5.00 bar of soap, the sales tax is about 24 cents. The amount you keep after taxes was $4.76. At 5.3% (the new tax), the sales tax is 25 cents. The amount you keep after taxes is $4.75. The .3% increase in sales tax is about 1 penny per bar. If 1 penny per bar is significant then you need to examine other parts of the business model.

Why not examine your supply chain for inefficiencies. There may be some easy things you can do to achieve better ROI. Maybe buy larger quantities to take advantage of price breaks or finding alternate suppliers with better prices. You might find that you save more than 1 penny per bar and your ROI increases even with the sales tax increase.

 

[Second Impression]

I'm just to the north in Maryland. Legally (here), sales tax cannot be included in product pricing, it must be listed as a separate item on a receipt so the customer knows what they paid in taxes and so they can manage their own taxes accordingly. I charge the sales tax separately. I do get the odd customer who makes a funny face when the sign says $5/bar and I tell them their total is $5.30 but no one has made a fuss over it. I get the occasional question but a 10 second explanation of toeing the law is enough. I know *most* crafters just eat the tax or build it in to the price, but it makes my bookkeeping life easier and I don't have to worry about being in the legal wrong should I ever sell to a tax agent having a bad day (because that's the kind of luck I have!).

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