I'm working on my home-based kitchen; I live in KS. I hope to be open by March of 2009!! My question is about sales tax....I contacted someone at the state and she sent me out a bunch of booklets to fill out. I understand most but I'm a little confused about Tax exemption certficates. We're required to charge sales tax on our finished product, correct? But it seems more like a hassle when I'll only need to do about $1,500 worth of business/month to stay home. Do you take the exemption certificates with anytime you buy cake supplies and just provide it to the clerk? how would you handle it for online purchases??? Sorry if this is a silly question! Any advice or tips would be much appreciated!! Thanks!!
Ok, if your getting licensed and having your home oked by the state to bake in, then yes, you have to charge sales tax on your finished cakes. It all depends on your state on what the amount is and what they consider taxable. Some states have tax on all fast food products or retail food services.
In order to be tax exempt I think you have to be under a certain amount of money for the year not to claim it. I dont think you use the exempt when you buy your supplies unless you are considered like a church or non-profit agency.
Your best bet is to talk to an accountant about what your state considers to be taxable, etc. And make sure you keep up on your bookkeeping. Save all receipts and right down as much information per transaction as possible. This way it will save you a lot of headaches later on!
not sure if this is what you are talking about, but if i want to buy from a wholesale place and not be charged tax i have to have on file with them a certificate of sales and use tax ...that way it shows i am a business and they won't charge me tax...the company you buy from keep this form on file
regarding taxes i have to charge tax on the cakes that i do and file quarterly on the sales i did and pay taxes on it.
Sam's CLub has me set up on tax exempt. But if I buy from Walmart, I just pay the sales tax ... it's all deductible as part of the purchase anyway.
on the flip side, if you sell to someone who is tax exempt, you need to get and keep a copy of their tax exempt certificate in your files to justify why you didn't charge them sales tax.
Here is a link to a fact sheet that I found on KS Department of Revenue's website. http://www.ksrevenue.org/fact%20sheets/fsbakeries.pdf
Generally, if you want to buy an item that is normally taxed but is exempt because you are using it to be resold to your customer, you need to issue an exemption certificate to your vendor.
In Kansas, you can issue an exemption certificate only if you are buying something that will ultimately be transferred to your customer. This would mean that all you food purchases (these may actually be non-taxable to begin with) as well as any disposable packaging items that cannot be reused are exempt.
Equipment and supplies are still taxable. This includes large pieces of equipment as well as smaller items like your cake pans, decorating tips, etc...
I did sales taxes for 4-1/2 years and did handle KS taxes, so if you have questions, feel free to e-mail me at firstname.lastname@example.org