Probably Shouldn't Have Waited Two Years To Ask This....

Business By Jessica1817 Updated 2 Oct 2009 , 12:23am by Michelle104

Jessica1817 Posted 1 Oct 2009 , 2:28am
post #1 of 13

When I purchase certain items from my cake supply store, they are tax exempt. Does the ingredients I purchase from Costco/Wal-Mart qualify, and if so, how would I do this?
Thanks!!!

12 replies
indydebi Posted 1 Oct 2009 , 2:35am
post #2 of 13

At Sam's, when I signed up for my business account, I was set up as tax exempt. Each time I ring out, it flags the cashier to confirm if my purchases are tax exempt. most are .... some I have to pull aside and tell her "These are not".

At walmart, I just pay the sales tax, if applicable. to me, it's not worth the hassle of holding up the line to save a few cents when I'm going to deduct the whole dang thing on my taxes anyway.

littlecake Posted 1 Oct 2009 , 1:49pm
post #3 of 13

you can get a tax exempt card from walmart too....hardly takes any time in the line....your # is in the computer.

talk about waiting 2 years tho.....i go almost 100 miles round trip every week to get supplies....haven'y been taking it off my taxes.

DUH....how much money is that???????????

just didn't think about it.

CutiePieCakes-Ontario Posted 1 Oct 2009 , 4:18pm
post #4 of 13
Quote:
Originally Posted by littlecake

you can get a tax exempt card from walmart too....hardly takes any time in the line....your # is in the computer.

talk about waiting 2 years tho.....i go almost 100 miles round trip every week to get supplies....haven'y been taking it off my taxes.

DUH....how much money is that???????????

just didn't think about it.





I used to work for Weekenders, a home show ladies apparel business (now out of business from bankruptcy, I think). When I would go out for a show, I would mark down the odometer reading when from I left the house to when I returned. I kept a small book in my glove compartment for just this. This gives you a rough estimate of distance travelled, from which you can figure out the cost of gas (your car gets X miles per gallon, you drove XX miles, so the gas cost $X for that trip).

All costs that relate to your business should be recorded somewhere ... sometimes it's a right-off, sometimes it isn't. Let an accountant make that decision for you, when you're ready for one.

costumeczar Posted 1 Oct 2009 , 4:59pm
post #5 of 13

I got the tax exempt card for Walmart at customer service. THe other grocery stores I go to told met hat I'd have to send a request to their corporate office, so forget it. But Walmart was easy...They give you the card and you just give it to the cashier before you pay.

IsaSW Posted 1 Oct 2009 , 5:47pm
post #6 of 13

I am a little confused.
So If you don't pay taxes at Walmart, then you are done with that receipt, and you won't add it for tax purposes?

What kind of items are tax exempt? Ribbon, fondant?
Could you explain a little bit more?

Thanks

indydebi Posted 1 Oct 2009 , 6:04pm
post #7 of 13

In general, if you are buying something that you will remake into something that you will resell and collect sales tax on it (assuming it's taxable), then you can purchase it tax exempt. The logic is otherwise the sales tax is being paid twice (once when you bought the ribbon at walmart and then again when you sold it on your crafty basket you sold to a customer).

Since food items are not taxable in my state, most of the stuff I'd buy at Walmart is tax-exempt to start with.

Quote:
Quote:

then you are done with that receipt, and you won't add it for tax purposes?


YOu still deduct the cost of the item as an expense .... part of COG (cost of goods sold).

Ruth0209 Posted 1 Oct 2009 , 6:10pm
post #8 of 13

I think the only things that are exempt from sales tax are the things you will re-sell to the customer. Cake ingredients, cake boards, ribbons, etc., are exempt from sales tax because you are going to collect sales tax on all that when you sell the cake to the customer. On the other hand, if you buy a cake pan, it's not exempt from sales tax because you're not going to collect the sales tax on it from a customer.

Being able to deduct all of that on your taxes as business expenses is different than not paying sales tax on it. Two different things.

The PP is correct that you need to maintain a mileage record AS YOU GO (it's called a contemporaneous record, meaning you created the record when the event occurred). I keep a notebook in my car and record date, purpose of trip and brief note of where I went (bank, Walmart, Michael's, etc.), starting and ending odometer readings, and total miles travelled for the trip. Then there's no question about the validity of what you deduct on your taxes, just in case the IRS questions it. They are skeptical about estimates. They want actual records.

My personal philosophy about deductions is that if I don't have a receipt or record for it, it didn't happen and I don't try to deduct it.

One more thing. When I submit my quarterly sales tax to my state, I can subtract all the sales tax I paid for those supplies. Since I keep a record of all expenses with a breakdown of purchase price, sales tax, and total, it's easy to get that number and subtract it. I have "tax exempt" set up where I can, but it's nice to be able to subtract it for the places where I don't. Since I often mix personal purchases with cake supplies, sometimes it's just easier to do it that way. Check with your state tax commission to see if you can do that. HTH

Ruth0209 Posted 1 Oct 2009 , 6:17pm
post #9 of 13

My state tax commission offers a free workshop on sales tax for small business owners. If your state has that, it's worth taking. Most states also have SCORE offices (volunteers who answer business questions through the SBA - look at the SBA web site). Mine offers a day long "Setting Up Your Small Business" workshop for $75. Well worth the cost (and probably deductible). The SCORE counselors will talk to you one-on-one and help you with all aspects of business. These are great resources you should access if you can.

For me, this was the more intimidating part of starting my business. I know how to make cakes, but it's sure more than turning on the oven!!

Jessica1817 Posted 1 Oct 2009 , 8:32pm
post #10 of 13

Thanks so much for all the great info! I will definitely be checking into this thumbs_up.gif

cakesweetiecake Posted 1 Oct 2009 , 8:49pm
post #11 of 13

OP, thank you for asking this question. This thread is very informative! I tell ya, I learn something new around here every day! LOL! icon_biggrin.gif

leah_s Posted 1 Oct 2009 , 10:59pm
post #12 of 13

In KY there's no sales tax on whole cakes. If I sell you a slice, or hand you a fork, then I have to charge you tax. silly, isn't it?

Also, I just run a mapquest between my starting point (house) and the destination, round trip and use that for my mileage calculation. My accountant said that would work fine as I never remember to keep the as you go record.

Michelle104 Posted 2 Oct 2009 , 12:23am
post #13 of 13
Quote:
Originally Posted by leah_s

In KY there's no sales tax on whole cakes. If I sell you a slice, or hand you a fork, then I have to charge you tax. silly, isn't it?

Also, I just run a mapquest between my starting point (house) and the destination, round trip and use that for my mileage calculation. My accountant said that would work fine as I never remember to keep the as you go record.





Leah! Thanks for sharing that! That's a great idea!! I usually forget until about halfway through the trip!! icon_lol.gif

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