Tax Exempt??

[brian0523]

Ok I was chatting with a friend recently about my business - she's trying to start a home-based business selling personalized greeting cards.

Anyway, she made comment that if she buys supplies that are going to be used to make her cards or resell, that she didn't have to pay tax to the company selling her those supplies.

Now I thought that was only the case if you purchased from a supplier in the same state you do business - but she says it doesn't matter what state the seller is in.

Can anyone clarify? Tax stuff is so confusing and constantly evolving.

 

[Lindy]

I can only comment on Canada - here in BC if we purchase items for manufacture and we are a PST registrant then we don't have to pay the PST however we do have to pay the GST which we get back when we file our quarterly tax repors.....

 

[smellitlikeitissoaps]

Ok I was chatting with a friend recently about my business - she's trying to start a home-based business selling personalized greeting cards.

Anyway, she made comment that if she buys supplies that are going to be used to make her cards or resell, that she didn't have to pay tax to the company selling her those supplies.

Now I thought that was only the case if you purchased from a supplier in the same state you do business - but she says it doesn't matter what state the seller is in.

Can anyone clarify? Tax stuff is so confusing and constantly evolving.

I have a seller's permit, which means anywhere in the US I do not pay taxes on my supplies. If the company asks for your # provide them with it, and they will keep it for tax reasons. I do not pay taxes in any state including mine. She is correct, as long as he has her Resale/ Sales Permit.

 

[Tabitha]

Anything you buy in the US to resell should be tax exempt if you charge your buyer tax on that item when you sell it. That way tax is only paid 1x, not by you as a buyer & then by your buyer again.

NOW: This is somthing you probably did not know. It came straight from the tax officer himself. If you buy 10 hammers, sell 2, keep 1 for your own handy work & donate 1 to a church auction, the government wants tax on all 4 items even though only 2 were sold. When you kept 1 & when you donated 1 you became liable for the tax on those 2 item since you bought it for resell w/o paying initial tax.

Did I lose you?

Serioulsy, I was late on my biz taxes my 1st year, the offficer drove to my location & scared the beegeebies out of me :shock: .

 

[smellitlikeitissoaps]

Anything you buy in the US to resell should be tax exempt if you charge your buyer tax on that item when you sell it. That way tax is only paid 1x, not by you as a buyer & then by your buyer again.

NOW: This is somthing you probably did not know. It came straight from the tax officer himself. If you buy 10 hammers, sell 2, keep 1 for your own handy work & donate 1 to a church auction, the government wants tax on all 4 items even though only 2 were sold. When you kept 1 & when you donated 1 you became liable for the tax on those 2 item since you bought it for resell w/o paying initial tax.

Did I lose you?

Serioulsy, I was late on my biz taxes my 1st year, the offficer drove to my location & scared the beegeebies out of me :shock: .

Yes, lol i took a sales tax class and was in there like :shock:

Anytime you donate something you pay taxes, you keep something for yourself, you pay taxes...

I will pay for the taxes...but how they know if I kept a bar of soap??? :roll: who knows lol.. that includes samples that you pass out. :shock:

 

[jbarad]

Would it not be easier then to just pay the sales tax on the supplies then deduct what you're eligible to deduct at the end of the year ?

Say you paid 200.00 in sales tax through the year on supplies. At the end of the year, 175.00 of that you are eligible to "not pay" based on sales, the other $25.00 worth was in products you kept, gave away, etc.

 

[Tabitha]

No, cause if I bought 10 hammers at $1.00 each ($10.00), my tax would be 8.25%= .82cents.

If I sell those hammers at a 2x markup, I sold them for a total or $20.00 and the tax would be $1.64.

It doesn't jive.

There was a guy on here one time that did just that, paid tax on his supplies. Then claimed he gave the actual soap away but charged his customers $5.00 a bar for the labor it took to make each bar. Because you do not charge tax on labor, he then said he did not need to charge tax or pay tax in.... not sure how that worked out for him. I wouldn't suggest it though.

 

[brian0523]

Ok I was chatting with a friend recently about my business - she's trying to start a home-based business selling personalized greeting cards.

Anyway, she made comment that if she buys supplies that are going to be used to make her cards or resell, that she didn't have to pay tax to the company selling her those supplies.

Now I thought that was only the case if you purchased from a supplier in the same state you do business - but she says it doesn't matter what state the seller is in.

Can anyone clarify? Tax stuff is so confusing and constantly evolving.

I have a seller's permit, which means anywhere in the US I do not pay taxes on my supplies. If the company asks for your # provide them with it, and they will keep it for tax reasons. I do not pay taxes in any state including mine. She is correct, as long as he has her Resale/ Sales Permit.

Thank you for your response. I guess I got it all backwards. I have a sellers permit. I tried looking up the info on the NJ Tax website but that place is a mess and couldn't find the info.