How Do You Handle Sales Tax??

Business By springlakecake Updated 14 Aug 2008 , 8:06pm by lovinkakes

springlakecake Posted 11 Aug 2008 , 8:11pm
post #1 of 15

I have been working on getting my legal business together for the last couple of months. Anyway I am curious how you all handle sales tax. Do you just charge on top of your cake price (like purchasing anything else), or do you just up your cake prices a bit so that it is included in the total?

14 replies
Cakery Posted 11 Aug 2008 , 8:19pm
post #2 of 15

I have a small actual shop front...so my customers come to pick up the cakes. I have a register....so my tax is computed in with my register key. So tax is added on top of the price of the cake. With my state and my business...I collect my tax....then I have to pay and turn the sales tax in every 3 months. The state of Missouri sends out a small payment book with all the info and I just have to fill in my receipt and send in my collected tax then. Mine is set like I said....to send every quarter.

springlakecake Posted 11 Aug 2008 , 8:27pm
post #3 of 15

Yeah, I would expect when I go to a shop that I would get charged sales tax. Since my will be out of my home (licensed separate kitchen though) if for some reason people wouldnt be expecting to pay tax. I just wondered if it would be easier to build the price of tax right into the cake.

costumeczar Posted 11 Aug 2008 , 8:32pm
post #4 of 15

I work out of my home too, and I charge the sales tax on top of the total price. I think that people expect to pay it regardless, and if you build it into the price of the cake they might think that they're not paying it.

brendaonline Posted 11 Aug 2008 , 10:51pm
post #5 of 15

You can use a spreadsheet program to calculate the tax and other charges if you want to, and even sometimes make a printable invoice right in the program. Many financial programs (like Quicken, etc.) also have options to create invoices and calculate tax automatically.

jules1719 Posted 12 Aug 2008 , 1:38am
post #6 of 15

I offer my 2 cents with the best of intentions. I struggled with this very question when I opened my business.

Have you discussed this with your accountant? My accountant verbally smacked me on the back of my head....

Sales tax is the burden of the customer. As a business owner, this is how you need to think.

Whether you charge $100 or $1000 for a cake, think of the price as your share. The customer pays the tax. Period. Why would you charge $100 and pay sales tax out of your share? It's worse for the $1000 cake- now you are out $65. Sell ten of those cakes and you've lost $650.

It's not convenient to include tax in the price- it makes you a dupe.

Everyone expects to pay sales tax and custom cakes are no different.

[dismounts high horse] icon_lol.gif

littlecake Posted 12 Aug 2008 , 1:51am
post #7 of 15

yeah, just add it on, they don't think a thing about it, people are used to taxes.

BTW that horse cake is very cool...great job!

in some states theres no tax on food....that would rock....

lillicakes Posted 12 Aug 2008 , 4:53am
post #8 of 15
Quote:
Originally Posted by jules1719


Sales tax is the burden of the customer. As a business owner, this is how you need to think.




Actually, in some states (if not most), the tax is the burden of the business. In Michigan, for example, the deal is that it is a tax that the business must pay, but it is permissible to collect that amount from the customer. This may be more a matter of semantics than anything else, as I agree basically with your result.

In other words, Madame Cake-Businesspersons, you are on the hook for it, so you may as well tag the customer for it. icon_wink.gif

springlakecake Posted 12 Aug 2008 , 12:03pm
post #9 of 15

okay then I will probably just add it on top of the total then. I am in Mich. actually and no there is no sales tax on food...but that is only food from the grocery store. Prepared food (restaurants etc. there is tax) So I assume cakes would fall under the taxed category.

Aliwis000 Posted 12 Aug 2008 , 3:14pm
post #10 of 15

What a headache! Sales tax is so sticky. Here in Texas some food is taxed other food is not. Some services are taxed others are not. And customers for some reason forget about it a lot. We quote a job for 250.00 plus tax Then they come and pay and the bill is 270.63, dont get mad at me the government wants there share.

Alicia

PS GOOD LUCK!!! Keep us posted how it is going, you will do amazing!

SweetConfectionsChef Posted 12 Aug 2008 , 4:32pm
post #11 of 15
Quote:
Originally Posted by merissa

okay then I will probably just add it on top of the total then. I am in Mich. actually and no there is no sales tax on food...but that is only food from the grocery store. Prepared food (restaurants etc. there is tax) So I assume cakes would fall under the taxed category.




Honestly, I wouldn't assume anything...call your comptroller they can tell you how to handle this according to state regulations. You have to file the necessary paperwork to get the Tax ID # anyway and they usually have a packet to explain what you need to know.

springlakecake Posted 12 Aug 2008 , 4:36pm
post #12 of 15

Yeah, I am not exactly down to the details yet, just kind of wondering how others handled it. I have just filed my LLC paperwork and I am waiting for that to all come back. Then I can file for fed tax ID then the state after that.

lillicakes Posted 12 Aug 2008 , 8:42pm
post #13 of 15

Have a look at

http://www.michigan.gov/treasury/0,1607,7-121-44402_44415_44416-7286--,00.html

about Michigan sales tax. Bakery items have different treatment, depending on where they are to be consumed.[/url]

springlakecake Posted 12 Aug 2008 , 11:16pm
post #14 of 15

hmmm! good to have. Definitely confusing. Thanks!

lovinkakes Posted 14 Aug 2008 , 8:06pm
post #15 of 15

Taxes. Ah yes. For deliveries, I have to charge the tax for that city or county if it's self-collecting.

So every time I deliver to a town, I record information from their sales tax office so I don't have to call them again.

It is illegal in my state to include the tax in the price.

Orders that are picked up just have the tax for my town.

Food isn't taxed for the city if it is delivered to a home. It is taxed if it's delivered to a business or a venue (i.e. the wedding venue).

Fun, huh? And that's not all....

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