Sales Tax

[Eldorado]

Folks,

In my small leather business, so far my sales have been entirely internet. As a result, and because I operate in unincorporated county where there is no sales tax, I've not gotten a State sales tax license thus far. However, I've begun to attract some interest locally and may be doing some in-state business soon. My sales are few and far enough between that it seems pretty onerous to get a license and report quarterly forever after.

I've heard that when doing custom work (rather than selling out of inventory), you can choose to bill for only the labor and so avoid sales tax on the merchandise. Anyone else have any knowledge of this?

Thanks in advance.

[wildrose]

I suspect if you're paying tax on your supplies, then that would work. I myself have a tax id in VA and submit payment monthly (it was quarterly in PA though). It helps me in several ways, the biggest being that I get the makers & sellers discount at Tandy. I incorporate the tax into my item cost, so that I'm not carrying a bunch of coins around at events. It works for me.

[Eldorado]

I suspect if you're paying tax on your supplies, then that would work. I myself have a tax id in VA and submit payment monthly (it was quarterly in PA though). It helps me in several ways, the biggest being that I get the makers & sellers discount at Tandy. I incorporate the tax into my item cost, so that I'm not carrying a bunch of coins around at events. It works for me.

Thanks for that insight. Fortunately, Tandy and some others have provided me a business account since I have a valid DBA on file with the state. If I lived a couple of miles north I'd be in the city and would need a sales tax license, but there are benefits to being in the county.

I'll have to look into this more.

[BIGGUNDOCTOR]

I believe that you can only charge labor if the customer supplies the material. Even if you pay sales tax on the material you are still creating a new item. When I had my machine shop, repairs were labor only, but if we made anything from scratch , or used any materials to do the repairs, those jobs, and materials had to be taxed.

This can be a pretty gray area that you are getting into depending on who you talk to with the various agencies, and departments.