Charging Tax

Decorating By tannersmom Updated 22 Apr 2009 , 7:33pm by tannersmom

tannersmom Posted 22 Apr 2009 , 12:31am
post #1 of 13

I was wondering if home-based businesses charge tax on their orders.
I have to pay it. SHould I just bite the bullet or let the customers pay it?


Stephanie

12 replies
indydebi Posted 22 Apr 2009 , 12:40pm
post #2 of 13

Heck yes they pay it!!! Why wouldn't you charge them sales tax?

JenniferMI Posted 22 Apr 2009 , 12:58pm
post #3 of 13

You really should check the tax rules in your state. I don't have to charge sales tax on my cakes, as long as I don't have tables and chairs where they are consuming the product on site. I only have to charge sales tax if they buy something like a cake topper from me. Something non-edible that I am reselling.

It can be confusing, but it's also a pain to charge the tax, fill forms, ect.
In Michigan, we also have use tax. Anything that I am using for my business that I'm not reselling and purchase wholesale, I pay use tax. It's the same rate, so they get you coming or going icon_smile.gif Example of use taxable items, cake pans.... candy molds...ect. Edible items do not apply.

Hope this helps -

Jennifer icon_smile.gif

indydebi Posted 22 Apr 2009 , 1:00pm
post #4 of 13
Quote:
Originally Posted by JenniferMI

You really should check the tax rules in your state. )



She is absolutely right. My response was based on an assumption that sales tax was required on your product since you said you had to pay it.

JenniferMI Posted 22 Apr 2009 , 1:04pm
post #5 of 13

Hey Debi -
Ohhh, I might have taken her wrong. Yes, if you KNOW you HAVE to pay the tax into the state, by all means, you should charge the customer.
That is profit not in your pocket if you don't....

Jen icon_smile.gif

jammjenks Posted 22 Apr 2009 , 1:05pm
post #6 of 13

In NC the rate is 2%. It used to be 7%, but that changed 1/09 to 2%. On birthday cakes and such, I don't normally mess with charging the 2% because it amounts to less than $1 most of the time. I DO charge it on the wedding cakes.

It's really up to you. That's just how I do it.

indydebi Posted 22 Apr 2009 , 1:13pm
post #7 of 13
Quote:
Originally Posted by jammjenks

In NC the rate is 2%. It used to be 7%, but that changed 1/09 to 2%. On birthday cakes and such, I don't normally mess with charging the 2% because it amounts to less than $1 most of the time. I DO charge it on the wedding cakes.

It's really up to you. That's just how I do it.



Do you report and pay the sales tax on the birthday cakes though? If the state law says they are taxable, I would think you are required to collect the tax.

Remember we are not CHARGING sales tax. We are acting as an agent for the state, in place to collect the tax FOR THEM from the consumer.

I know a business who says he doesn't collect the sales tax because he doens't want to mess with paying it. His logic is "If I dont' collect it, I dont' have to pay it." He is operating so freakin' illegal by doing that and I waffle between hoping he doesn't get busted (because of our friendship) and hoping he does (because it's an expense that *I* have to deal with as a business, so why doesn't he?!)

jammjenks Posted 22 Apr 2009 , 2:08pm
post #8 of 13

Yeah Debi, I do have to pay it whether I charge it to the customer or not. For the first quarter of 2009 it was only about $21. It just seems more convenient for me to eat that cost than to try to come up with the correct change when someone pays me with cash. KWIM icon_wink.gif

SecretAgentCakeBaker Posted 22 Apr 2009 , 2:08pm
post #9 of 13

In some states, if you are required to collect sales tax, you may also be required to itemize the tax on the receipt. I know it is like that in NYS. Some places will have a sign up that says 'tax included', but according to a guy I spoke to at the tax office, that practice is not legal.

The best thing to do would be to just make a quick call to your local tax office to find out. Your county may also have its own rules, if they charge tax, so call the local office, rather than the state office.

tannersmom Posted 22 Apr 2009 , 3:54pm
post #10 of 13

I have to pay taxes on all my products according to the county and state (6.75%).do u included it in the product cost or in addition. I mean, I have to send it in out of my pocket if I don't charge them. Why I was asking is because people will always write me acheck and never include the tax even after I tell them "plus tax". I'm sure that they think because I"m a home-baker that I don't have to charge, but I do. How would you handle explaining this to the customer? I've tried and dang it I'm not getting in their heads.

Stephanie

7yyrt Posted 22 Apr 2009 , 4:06pm
post #11 of 13

You have to figure the tax, and say 'plus tax, that comes to...$' (or plus $0.37 for Uncle Sam...etc). Then they pay you.

indydebi Posted 22 Apr 2009 , 6:26pm
post #12 of 13
Quote:
Originally Posted by 7yyrt

You have to figure the tax, and say 'plus tax, that comes to...$' (or plus $0.37 for Uncle Sam...etc). Then they pay you.



yeah, the average consumer NEVER goes ahead and figures the tax. Hubby used to work in the service dept of the car dealership and people would come in for a $39.99 oil change and then complain because it was over $40 when "....the coupon said $39.99!" Hubby points out "with tax" and they go off about no body told them nuthin' about sales tax! Hubby's response is "Everyone pays sales tax on almost everything. It shoudn't have to be explained."

Unfortunately, with the dumbing down of america, we still have to explain it.

tannersmom Posted 22 Apr 2009 , 7:33pm
post #13 of 13
Quote:
Originally Posted by jammjenks

In NC the rate is 2%. It used to be 7%, but that changed 1/09 to 2%. On birthday cakes and such, I don't normally mess with charging the 2% because it amounts to less than $1 most of the time. I DO charge it on the wedding cakes.

It's really up to you. That's just how I do it.




I know the tax for me is 6.75% and I'm in N.C. Doesn't the 2% tax cover non-prepared foods?

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