Adding tax

[MichelleOH]

When some of you do shows, do you adjust the price of your products to include tax so you don't have to deal with all the change. I'm considering this but I don't know how much to adjust without short changing myself. Help appreciated.

[7Angela7]

I haven't done shows yet, but when that time comes, I will adjust my prices to include tax. Just take each product, multiply it by your rate (for instance, in CA the rate is 7.75%...taking a product that costs $5, then multiply that by 1.0775 = $5.39). I would round up and charge $5.50 for that product. Does that make sense?

[slow-burn]

That is the way to do it, but be careful. I talked to my accountant, and if you do it this way, then technically you need to charge tax on the 5.50, which is a tad higher. A few pennies doesn't sound like a lot, but over a period of time those pennies add up.

For example (following preivous example)

price wanted: 5.00

7.75 tax : .3875 = .39

For a total of 5.39

If you charge 5.50 for this, then actually you should be charging .426 or 43 cents for that sale. So if you claim that you sold x amount of candles, then the tax paid on them has to be on the amount charged.

When I asked her how I would be able to do it, she explained to me that I can charge the 5.50 like you suggested, however, I should not keep the extra money. So if you charge the 5.50, and the tax total is .39 then you need to give the whole 50 to the state for each sale. That way they can't come back and audit you, and question the way you are doing things. An audit is much worse than giving the state some extra money.

Another way around it would be to charge 5.10 for your product then the tax would be 39.5 or .40, which would give you your 5.50. I know this sounds silly, but it is all in the way you word the stuff. This amount ended up working even, but the advice given to me was to give the state any extra pennies if you are doing it this way, or else it can come back and bite ya in the butt!

[gottabt]

I do not include tax in my prices. I have heard but did not check that in some states including tax is not allowed. I have done some larger shows and I know that the tax reps were checking for tax certificates and that ppl were charging tax. I keep a copy of my tax certificate taped in the lid of my money box just in case.

HTH,

[deputy6512]

I am doing my first show next month, and plan on leaving my prices as they are. When I figured what I would charge, I left room for tax so I wouldn't have to figure it later.

[sheila sullivan]

Slow burn's right...if you do it that way, you still need to be very clear on how much of that is your product price and how much is the tax...when you submit your sales tax you have to either submit the actual percentage of your taxable sales or the amount you collected, whichever is HIGHER.

In my opinion, it's just easier to add the tax at the time of sale.

[Trish]

I find it's easier to have tax calculated into the price. I can easily add up $10 and $15 items versus needing a calculator to figure out tax. At shows here, I have to have a sign that says "sales tax included"

[Beth-VT]

You must check with your state requirements because it does vary.

Here, we are allowed to do it ONLY if the breakdown is clearly listed for the public to see, and sales tax must be on it's own line on any receipts handed out.

Example: I sell a certain candle for $13.50 retail. Including sales tax (6%) the sale price would be $14.31. For shows I generally round up to the nearest quarter for ease of transactions. Like Trish said, it's so much easier if you don't have to do anything but add up the total for the items.

I advertise the candle as $14.50 ea. Tax Included, and on the price sheet it lists price $13.67/tax $0.83. It's not quite in that format but the numbers are the same.

I admit actuall sale price of $13.67 looks a bit odd, but most peeps don't really look at that, they just look at the final cost, and I have to do it that way to be legal. Just remember then that the sales tax to be remitted to the state is what you actually charged at the show (the $0.83), not what is normally charged on retail sales ($0.81). HTH.

[sudsnwicks]

Including the tax and rounding to the nearest quarter might be a good idea if it's allowed. Round numbers will help to encourage sales especially for cash paying customers. They may also feel it's 'cheaper' if the tax is already included.

[sharyl55]

I do not include sales tax in my selling price. As a newbie, I'm super concious about doing things right as far as the Sate is concerned. Having sales tax as a seperate line on the sales receipt was the only way I felt comfortable. Just have some change and you are good to go. I've found that a lot of people write checks so it isn't a big problem.

[topofmurrayhill]

I could see how the states might be concerned about the "sales tax included" concept and not allow it in some cases, because they might worry about whether the retailers are doing it correctly as well as whether consumers are properly informed about how much they're paying for the item.

However I wonder if it would be generally OK to charge the standard retail price for a product and simply say that YOU are paying the sales tax. I'm thinking more in the context of web sales here than shows.

For example, let's say you have a website and don't want customers in your home state to be less likely to buy than customers from out of state. So you even the playing field by clearly stating something to the effect of "XYZ Candle Corp. is based in the state of ZZ. We do not collect ZZ sales tax from customers, but we remit the required sales tax to the state at our own expense."

Does anybody know if that's cool?

[Beth-VT]

However I wonder if it would be generally OK to charge the standard retail price for a product and simply say that YOU are paying the sales tax. I'm thinking more in the context of web sales here than shows.

Funny you should mention that. That is one thing that is very explicitly explained in my state tax guidelines. The retailer is strictly forbidden from paying sales tax for the customer. Hope that helps some.....lol.

[Connie]

I charge sales tax too. 8% does add up and I got sick of paying this last year. My cash box has all the slots for the change so why not.

[Blest2BAmerican]

I heard in some states that you should add the tax at the end of the sale. I've heard of some officials visiting craft shows and asking to see how the taxes are being tracked. They say to write receipts and if you say you are including tax, you better have it broken down.

[slow-burn]

I heard in some states that you should add the tax at the end of the sale. I've heard of some officials visiting craft shows and asking to see how the taxes are being tracked. They say to write receipts and if you say you are including tax, you better have it broken down.

Yep, and if you was to get audited, they would want to see this too. Most of my buisness is from home shows, and I always add tax at the end of the order. It says the % right there, and in my files, I have a listing of all counties sales tax, since here in Ohio, each county has a different tax, GRRRRR! And you have to charge the tax per what county you are selling in......Very much a pain in the butt!