Adding Sales Tax

Business By kellertur Updated 13 Mar 2009 , 10:48pm by costumeczar

kellertur Posted 10 Mar 2009 , 3:19am
post #1 of 7

Yes, I know my State's sales tax %, however with cakes are the rules the same? Are we simply calculating and adding it to the total? I made the mistake a few times of not charging sales tax... icon_redface.gif
I want to make sure I'm doing this correctly. My filing date is quickly approaching... and I'd hate to have made stupid mistakes.

Thanks icon_smile.gif

6 replies
indydebi Posted 10 Mar 2009 , 3:47am
post #2 of 7
Quote:
Originally Posted by K2cakes

Yes, I know my State's sales tax %, however with cakes are the rules the same? Are we simply calculating and adding it to the total? I made the mistake a few times of not charging sales tax... icon_redface.gif
I want to make sure I'm doing this correctly. My filing date is quickly approaching... and I'd hate to have made stupid mistakes.

Thanks icon_smile.gif



You need to check with your state IRS dept to see if prepared foods (cakes) are taxable. If they are taxable, you're eating the expense on those you forgot to add the sales tax to.

I sub-total the invoice, then add the sales tax as a separate line. To me, this keeps it nice and clean ... everything is documented and separate. (With catering, it's not unusual for me to have to charge a couple of hundred dollars in taxes to an invoice ... so yeah, I definitely want to keep that separate and spelled out for the customer.)

In my state, I actually have 2 sales taxes to compute ... 2 checks to write at the end of every month .... 2 calculations with every invoice ... so it's WAY easier to keep it clean and separate.

kellertur Posted 10 Mar 2009 , 3:56am
post #3 of 7

Thanks Debi~ I'll check with them tomorrow. icon_smile.gif

drowsyrn Posted 11 Mar 2009 , 8:08pm
post #4 of 7

Yes, make sure to check with the IRS and your county tax commission office. If I get paid for a wedding cake in my shop but I am delivering it to a place that is in a different county, the sales tax I have to charge is the % that county charges. This is the stuff you will learn when you speak with them. I would have never known that! So check with state and county.

kellertur Posted 12 Mar 2009 , 3:31am
post #5 of 7

Yesterday I called the Maine revenue office (IRS?) in Augusta and asked very detailed questions regarding charging sales tax on "consumable product/food" (as she put it). I was told that unless I am selling by the slice, I do not charge sales tax. (A whole cake does not get taxed in Maine, apparently). If I sell individual cupcakes, cookies, etc. I do charge tax unless I sell them by the 1/2 doz or dozen. Then they are considered a bulk item and not subject to sales tax.

I asked her for that info in writing and she referred me to the website that states the same. I'm still not convinced and want to look further into it incase there was a misunderstanding, although I can't imagine having been any clearer. (they hate me in Augusta...for my thousands of questions icon_cry.gif ) Could this be incorrect?

cakesdivine Posted 13 Mar 2009 , 1:10pm
post #6 of 7

K2 - it's the same here in Texas too. Whole baked items are not taxable and individually sold baked goods are. Eventhough I almost never sell individual taxed items, I do still have a Tx State Sales & Use Tax permit. All catered food however is taxable and so when I cater an event (which is rarely as I don't push this end of my biz yet, need a staff first...LOL) I have to collect sales tax.

costumeczar Posted 13 Mar 2009 , 10:48pm
post #7 of 7

In Virginia there's some weird clause that taxes food from the grocery store at 3 or 4% depending on what it is, but cakes are still taxed at 5% like catered food. I looked it up recently and it's some exclusion about businesses that produce more than 80% of their food products to be consumed off-site, or something like that. Ingredients are taxed at different rates than cakes.

Every state is different, but if you can see the tax code on the website, and that's what it says, I'd print it out and keep it so that you have evidence that you did the research.

Every time I called about sales tax I got a different answer, and once I asked if I needed to pay tax on delivery fees. Their answer was "If you want to," icon_confused.gif Which to me meant "If you don't, we'll get you in an audit in ten years and demand all the back taxes for it." icon_lol.gif

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