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inavanilla



Posts: 2

PostPosted: Sun Feb 11, 2007 1:25 pm    Post subject: tax Reply with quote

hello
i'm not really sure what should be done in terms of charging tax on orders. i haven't actually done anything to my store yet... i'm waiting to get this figured out.
anyway, i plan on selling hand made scarves, greeting cards, and what not.
i know that tax is supposed to be charged only to orders that would be shipped within my state, illinois, but how would i find out exactly how much should be charged... and what is done with that money... and how the actual tax forms are to be delt with at the end of the year.
do i actually have to go out and find some sort of tax/accountant person to help with this, or can i do this on my own?
any help would be greatly appreciated.
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eleganzajewels
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PostPosted: Sun Feb 11, 2007 1:34 pm    Post subject: Reply with quote

What is your state tax rate? If you don't know, I'd go buy somethin' LOL...no, just kidding, you can contact your state tax agency to get that info. Browse google for "Illinois state tax department", see what you come up with. Some states, you can just use your SSN as an ID #, others, you have to apply for a state tax ID #.

Once you have your #, you charge the IL state tax rate on in-state orders, yup, yup. It's report quarterly, and they should send you the right forms to fill out and submit.

If you are going to go professional, it might be a good idea to download the free Quickbooks basic, and set up an appointment with a tax professional. Don't wait til 12/31, which alot of people do, start planning now! A separate bank account/charge card for the business is a good idea, too.

Here is the link to the QB basic, very simple, and you can always upgrade as your biz grows (compatible with Paypal and Turbo Tax, among others, very handy!):



http://www.download.com/QuickBooks-Simple-Start-Free-Starter-Edition/3000-2066_4-10609030.html


.
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zickit



Posts: 21857

PostPosted: Sun Feb 11, 2007 2:00 pm    Post subject: Reply with quote

If you have a sales tax license to collect and remit sales tax for your state then most sellers pass that on to the buyer.
You must have a sales tax license from the state in order to collect sales tax.

Some states require tax collected to be paid quarterly orthers annual - depends on how much and what your state requires.

If you do not has a sales tax license you can not legally collect sales tax.
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inavanilla



Posts: 2

PostPosted: Sun Feb 11, 2007 3:08 pm    Post subject: Reply with quote

so i don't need to be collecting tax?

how do all the end of the year tax papers and what not work then?
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eleganzajewels
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PostPosted: Sun Feb 11, 2007 4:41 pm    Post subject: Reply with quote

Let's put it this way: you don't have to collect sales tax, but you sure has heck have to pay it. Many sellers (dishonestly) do not report their income, they of course do not collect, report, or pay taxes, either.

Better to start out on the up and up. Contact your state's taxation department (google or the government pages of your telephone book). They can provide forms and correct information particular to your state's regulations, including whether payments are due quarterly or annually.

Good luck.
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capitalus



Posts: 124

PostPosted: Sun Feb 11, 2007 11:36 pm    Post subject: Reply with quote

Actually this question bothers me too... I'm in NY, and I do have the Tax ID, so I officially collect tax, though only on the item price. Is this the right way to do or should I collect it on the full amount (including shipping)? Also, I don't know if this question is relevant to IL - as far as I know in NY State the tax rate is different in different parts of it. In NYC (where I am), it's 8.375%, and in other places it may be lower. I collect 8.375% - is it the right thing to do? Also, in NYC if I go buy closing at a local store, I don't pay taxes (up to a purchase limit). So if I have a local buyer, do I collect tax from them or not? That's going to be the 1st quarter for me to report the taxes.

Sorry inavanilla I added all these questions, hopefully they will help you too...
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zickit



Posts: 21857

PostPosted: Mon Feb 12, 2007 12:36 am    Post subject: Reply with quote

Quote:
I'm in NY, and I do have the Tax ID, so I officially collect tax, though only on the item price. Is this the right way to do or should I collect it on the full amount (including shipping)?


This depends on your state. Call them and ask then you know you got the correct answer.
Here in Colorado tax is due on the total amount. The only thing tax is not collected on is a service. Like if I am hire to to labor or whatever, I don't charge tax, if I sell a product I charge tax on the product and the shipping charges.

Quote:
Also, I don't know if this question is relevant to IL - as far as I know in NY State the tax rate is different in different parts of it. In NYC (where I am), it's 8.375%, and in other places it may be lower. I collect 8.375% - is it the right thing to do?

Same issue here - There is state tax, plus local city tax and county tax and RTD tax, and sports team tax (or whatever they call that for having the pleasure of the Broncos) ... to be 100% correct tax is charges by the zip code within the state where it is being shipped here in Colorado. This of course is impossible online! So I charge state tax only and if I ship to the county I live in ot a place that I am suppose to collect RTD and sports team tax - I just pay that out of my collected funds. I only pass on the state tax to my buyers. It's just too complicated to do it any other way for me. Since I am not licensed to collect other county taxes - except my own - I don't worry about them.
Since it is so complicated here - I mean geez you have to know if they buses run in that area of town to know if you have to collect RTD tax, and some zip codes pay the sports tax and others don't. It's just easy for me to pay that out of my profits when I do the paperwork then to try to figure it all out to bill them correctly. I figure most it cost me is 5% - which I also make up in the shipping really, because postage to local area is less then other zones. So to me it all works out!

Quote:
Also, in NYC if I go buy closing at a local store, I don't pay taxes (up to a purchase limit). So if I have a local buyer, do I collect tax from them or not?

Do you mean YOU don't pay tax because you use your tax license to make the purchase? OR do you mean that NYC don't charge tax on certain items?
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eleganzajewels
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PostPosted: Mon Feb 12, 2007 5:19 am    Post subject: Reply with quote

Hey, a fellow NY'er, hola! Smile I'm upstate, so only collect and pay 8% (did I just say ONLY pay?!? Ha!)

You're collecting and paying tax on the resale of your goods and services. So shipping is non-taxable, and you collect tax on the resale amount. Services in this state are taxable - check your invoice next time you get an oil change, they charge tax on the whole kaboodle, not just the oil filter.

As far as not paying tax yourself up to a certain limit, NYS does not care about that. If you sell it, you have to charge sales tax, and submit it to the government. Dunno how how your vendors are working it, but they should be paying tax, too. Here is the link to the NYS Dept. of Taxation. Better to try to find info on here, getting through to someone live is tough!



http://www.tax.state.ny.us/sbc/
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capitalus



Posts: 124

PostPosted: Tue Feb 13, 2007 10:42 pm    Post subject: Reply with quote

Thanks BT and Eleganza!

Eleganza - I'm on Staten Island (NYC), but I also spend some time every summer in Catskills, to be more precise, my kids spend time there, and I go see them every (or almost every) weekend.

BigTallMensClothing wrote:
Do you mean YOU don't pay tax because you use your tax license to make the purchase? OR do you mean that NYC don't charge tax on certain items?


In NYC we don't pay tax on closing and shoes up to $100 (maybe a bit more, not sure) . That's not just me, everyone, you too if you happen to come shopping in NYC Smile . I did have a local buyer, though he bought something other than closing/shoes . But what if he bought a shirt that I'm selling? Would Ihave to collect taxes? Rolling Eyes

BigTallMensClothing wrote:
It's just easy for me to pay that out of my profits when I do the paperwork then to try to figure it all out to bill them correctly.


BT, how do you figure it out? By zip? Where do you get the info what total tax rate is in each zip? I'm lost Confused
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zickit



Posts: 21857

PostPosted: Wed Feb 14, 2007 1:45 am    Post subject: Reply with quote

EVERY state, city and county is different when it comes to sales tax. If you have a sales tax license it is best to cotact the state, city you live in and county you live in to see what you need to collect.

I don't want to be the one to tell you wrong and you be the one that ends up paying fines and penalties because of it.

just call the office that you got your sales tax license from.
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eleganzajewels
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PostPosted: Wed Feb 14, 2007 4:45 am    Post subject: Reply with quote

Wow, it is a small world after all! I love the Hunter Mountain festivals in the Catskills! Haven't been in a few years, but used to always go to the Native American and German festivals.

You are right, Pataki changed the law on certain items. BTM is right, check that link, and check with the state, best to get it straight from the horse's mouth. I do know that NYS rarely misses an opportunity to levy any tax (HA!), and the exceptions are few and far between Sad

Have a great day, enjoy the snow, I know I am going to!

Linda
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captkirk42



Posts: 32

PostPosted: Fri Feb 16, 2007 1:12 pm    Post subject: Reply with quote

That is another bad thing about FeeBay. They required you to charge sales tax for "in-state" sales. Of course I recently bought something from an in-state seller and wasn't charged sales tax, maybe they have changed their policy or the other seller didn't know about it.
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zickit



Posts: 21857

PostPosted: Fri Feb 16, 2007 2:03 pm    Post subject: Reply with quote

captkirk42 wrote:
That is another bad thing about FeeBay. They required you to charge sales tax for "in-state" sales.
\
No they don't. IT's in how you set up your listing. You have the option to say no sales tax.
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eleganzajewels
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PostPosted: Fri Feb 16, 2007 3:12 pm    Post subject: Reply with quote

Quote:
the other seller didn't know about it.


Whether sellers know it or not, it's the LAW that you must collect, report, and pay sales tax on in-state sales. Only a matter of time before they start catching people out, smarter and easier just to follow the rules
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zickit



Posts: 21857

PostPosted: Fri Feb 16, 2007 3:18 pm    Post subject: Reply with quote

eleganzajewels wrote:
Quote:
the other seller didn't know about it.


Whether sellers know it or not, it's the LAW that you must collect, report, and pay sales tax on in-state sales. Only a matter of time before they start catching people out, smarter and easier just to follow the rules


BUT it's also the LAW that you can not collect it without the proper license to do so.

Problem is sellers don't think of it as a business. Therefore they don't think they have to report the income or get the proper licenses.
The claim it's a hobby. Sorry to say a webstore is not considered a hobby by the IRS. Any income over $600 a year makes it a business. When ever you make a purchase of a product with the intention of selling it - makes it a business.
A business is required to have certain licenses.
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