Jump to content

Do any of you pay taxes on supplies with your business?


leisa2003
 Share

Recommended Posts

Hi, I was curious as to if any of you who have your own business, if you just pay the taxes on your supplies instead of using a tax exempt id.?

i was curious if its ok, to pay the taxes on the supplies instead of being tax exempt?

Would you have less taxes to pay in, if you are paying tax on supplies?:o

Link to comment
Share on other sites

I guess my response is... why?? Why would you tie up your money paying tax on your supplies and not use your money to buy supplies, pay bills or just have the money? I'm thinking you come out ahead to avoid as much tax as possible.

I spent the morning with my accountant... crunching numbers so I'm still a bit numb ;)

HTH... a little,

Chele

Link to comment
Share on other sites

I guess my response is... why?? Why would you tie up your money paying tax on your supplies and not use your money to buy supplies, pay bills or just have the money? I'm thinking you come out ahead to avoid as much tax as possible.

I spent the morning with my accountant... crunching numbers so I'm still a bit numb ;)

HTH... a little,

Chele

You are right! I am just thinking that.... why not just pay the taxes on supplies as they are, then to have to pay so much back to them I guess?:o

Link to comment
Share on other sites

i was curious if its ok, to pay the taxes on the supplies instead of being tax exempt?

It's not that you are exempt, let me explain. Suppose you buy wax from company A and pay tax. You use the wax to make a candle and charge tax when you sell it. That wax just had the tax paid twice! If buying supplies that are taxable, provide the vendor with a resale certificate, stating that you will collect the tax on the finished product.

Link to comment
Share on other sites

I think Leisa has her taxes confused.

The tax you would be paying for supplies that you re-sale is sales tax. The taxes you pay at the end of the year (if you showed any profit that year) is business taxes.

If you are a ligit business and have a state tax # then that # is for items / supplies you buy to re-sale, hence Tax exempt. When you make a product and sell it you charge sales tax and you send that to your state. That has nothing to do with year end business tax, that is your local & state sales tax.

Link to comment
Share on other sites

I think Leisa has her taxes confused.

The tax you would be paying for supplies that you re-sale is sales tax. The taxes you pay at the end of the year (if you showed any profit that year) is business taxes.

If you are a ligit business and have a state tax # then that # is for items / supplies you buy to re-sale, hence Tax exempt. When you make a product and sell it you charge sales tax and you send that to your state. That has nothing to do with year end business tax, that is your local & state sales tax.

Actually the tax you pay at the end of the year if you file a state and federal tax form is income tax. (Some cities may have a local business tax also, but not where I live). It is income from your business that you are taxed on. If you pay a sales tax on supplies you purchase to make your items or to re-sell in your business, that is considered a business expense. It is listed on your year end tax forms and is used as a deduction to decrease the amount of tax you owe to the government or to increase your refund, which ever the case may be.

For most of my supplies, I use my tax id# so I don't have to pay tax, and as Chele said, I don't have all that extra money tied up. But, there are a few places where it's more hassle than it's worth to use my tax id#. Places like wal-mart, sams, dollar stores, etc. you have to fill out a form each time you want to use your tax exempt # so I just pay tax, keep my receipt, and file it as an expense at the end of the year.

HTH

Jennifer

Link to comment
Share on other sites

I agree it is too much hassle to try to get the sales tax taken off it you are picking up a few supplies from the grocery store or other similar store. Also note that you still have to pay the sales tax if the item is not for resale. For example a new chair or notepads. So basically it would just be wax, wicks, dyes and FOs that you can get the tax exemption for, and those can't be bought at your walmart anyway.

Link to comment
Share on other sites

To expand a little on what E said:

If you purchase any item that in turn is sold to a customer (wax, jars, dye, labels, cello bags for packaging, ribbon, etc.) then you should not pay sales tax on it. You can either purchase items tax free via tax ID/re-sale certificate/wholesale license or whatever it's called in your area, or you pay sales tax on the purchase and then adjust it off when you file your income taxes.

Any item that you purchase for your business (from pour pots to tables to printers) that does NOT end up in the customers hands, needs to have that tax paid on it by you. If you do buy it tax-exempt at the time of purchase, you will then be required to pay a use tax/excise tax (again, may be called different thing in different places) at the end of the year.

In Vermont, our sales tax and use tax rates are the same. We are required to have both taxes submitted by the end of January (I pay annually, some pay bi, or quarterly).

Link to comment
Share on other sites

It's not that you are exempt, let me explain. Suppose you buy wax from company A and pay tax. You use the wax to make a candle and charge tax when you sell it. That wax just had the tax paid twice! If buying supplies that are taxable, provide the vendor with a resale certificate, stating that you will collect the tax on the finished product.

Thank You! I now understand.;)

I just thought... paying the taxes at the time of purchase, would be easier and you can just claim the taxes you have spent at the end of the year.

Link to comment
Share on other sites

In Vermont, our sales tax and use tax rates are the same. We are required to have both taxes submitted by the end of January (I pay annually, some pay bi, or quarterly).

Wish I could pay annually, I hate book work, I am right brained not left. In my state, I have to pay monthly.

Link to comment
Share on other sites

I just thought... paying the taxes at the time of purchase, would be easier and you can just claim the taxes you have spent at the end of the year.

But wouldn't that be like seeking out suppliers with the highest prices so you'd have more expenses to claim at the end of the year?

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

×
×
  • Create New...