Future Texas decorators: help on setting up

Business By smbegg Updated 11 Sep 2011 , 9:42pm by djbookkeeper

oabakes4u Posted 10 Aug 2011 , 1:49am
post #61 of 86

Oh, I'm not taking on major big projects either...this is just a side job to keep me busy while my kids are in school. Being that I'm very active into their schooling, I like to keep my time open for them so it's by appt only. Over the years I've collected most of the things used like, professional pans, pro-deco tips, cutting patterns and such. Some fam have said I'm wasting my talent but if it's something I don't plan to do on a day to day basis it's not wasted, I'm doing other things I think are more special. No point in opening a retail bakery either, cause I would lose money helping ppl out too much. Like I said, it just wks for me. I just posted that 'cause some ppl thought/think it was a MUST but it's really a choice/option if needed.

sillywabbitz Posted 10 Aug 2011 , 2:34pm
post #62 of 86

This thread has been very helpful. Thanks to everyone contributing. Especially the advice on the FEIN and the tax id. I will doing a sole proprietrship but I want a tax id so I can shop at the local restaurant supplyicon_smile.gif

I'm not sure how many people have checked out the Cake Boss software but I ordered it the day after the cottage food law went into affect and it is fabulous. It tracks your order, expense and sales tax. But my favorite is just the cost and overhead that went in to your cake to ensure you are pricing things correctly. I've had so much fun entering my recipes and master materials. It's been a real eye opener in the true cost of my cakes. I've got my first cake on the books for Sept 27. I can't wait.

RussellsCakes Posted 11 Aug 2011 , 6:52pm
post #63 of 86

Just something for everyone to keep in mind, especially those who have mentioned they don't want to deal with the EIN. If you are trying to start a business, want to maintain profitability, and be successful, buying things wholesale is much more cost effective. Why buy cake boards individually or in 5 packs when you can buy them 24 or more at a time, why buy one box at a time when you can buy 50. Sure, you may not need 50 right now, but if you do one cake a week and you use common packaging, you will wish when you look at your profit/loss statement, you are tracking ALL expenses and comparing them to revenue right, that you had saved that little bit on those boxes.

I spent 2 years making businesses more profitable. I had spread sheets that calculated down to the fraction of a penny how much each individual sheet of toilet tissue cost so that I could compare different size cases. If you are in business to make money, but you aren't willing to take advantage of every provision made available for you to make more money, then you need to re-think what you are doing!

smbegg Posted 11 Aug 2011 , 7:10pm
post #64 of 86

I just got my first wedding cake order for November!!! So excited.

Have y'all gotten your websites up and pricing set? I would love to see what you have going! I will post my link as soon as my husband gets it up!



Stephanie

yellobutterfly Posted 11 Aug 2011 , 7:49pm
post #65 of 86
Quote:
Originally Posted by Texas_Rose

I believe the fee for a LLC is $300 in TX.




Is this a yearly fee or a one-time fee?

kisamarie Posted 11 Aug 2011 , 7:54pm
post #66 of 86

The Quote I saw for the LLC was $357 and it is a one time fee.

yellobutterfly Posted 11 Aug 2011 , 8:18pm
post #67 of 86
Quote:
Originally Posted by kisamarie

The Quote I saw for the LLC was $357 and it is a one time fee.




Thanks!

kelleym Posted 11 Aug 2011 , 8:27pm
post #68 of 86
Quote:
Originally Posted by kisamarie

The Quote I saw for the LLC was $357 and it is a one time fee.



The fee is $300 for the filing with the Secretary of State. This does not include any legal fees that you may incur in getting the actual paperwork done.

alvarezmom Posted 22 Aug 2011 , 8:15pm
post #69 of 86

For Travis County the cost will be $14.00 for ONE business name and ONE owner.

http://www.co.travis.tx.us/county_clerk/dba.asp

alvarezmom Posted 22 Aug 2011 , 8:17pm
post #70 of 86
Quote:
Originally Posted by Texas_Rose

Oh, from what I understand, cakes aren't taxable in TX but you still need the sales tax ID, even if you never need to charge sales tax. If you sell a non-food item, like gumpaste flowers, or rent equipment out (I think) you have to charge sales tax on that.




Have any one found out if we need to get a sales tax if we will rent out equipment or sale gumpaste/royal icing flowers etc.,?

mcdonald Posted 22 Aug 2011 , 8:45pm
post #71 of 86

thank you for the information.. it should fill in what I already have!!! thank you!

djbookkeeper Posted 28 Aug 2011 , 6:20am
post #72 of 86

I've explained to several people the steps to go through on setting up a business (FEIN, DBA, sales tax, etc.) and decided to just type up the steps and include the links. It's a couple pages long so I'll just include a link. Hope it helps!

Setting up TX business

ConnieJ Posted 28 Aug 2011 , 12:52pm
post #73 of 86

Hi, guys. I will be meeting with my insurance agent on the 6th to go over the possibility of obtaining liability insurance. I want to understand where there would be a conflict between what my existing home insurance covers and what would be covered by liability insurance. If a fire starts while baking a cake for an order, will home insurance still cover that? I don't want something like that to happen and then find that it will not be covered because it falls under the business side and I only have liability. For those of you who may have already received answers from your insurance companies, what are some questions I should make sure to cover with my agent? Thanks for any help and guidance!

sillywabbitz Posted 30 Aug 2011 , 5:40pm
post #74 of 86

I wanted to post a quick note. I spoke with my friend who is a tax accountant regarding all of the different stuff. I was speaking with her regarding paying sales tax on supplies and charging sales tax. When I told her that we do not charge sales tax on the cakes because it's a food item, she pointed out then that the tax id from the state to avoid paying sales tax on ingredients and supplies is pointless. If you do not charge sales tax on the finish goods, you still owe sales tax on the ingredients and supplies. Basically the state gets their money one way or the other. Based on that info, I figure I'll buy wholesale but not tax free. Easier to pay it as I go then try and figure out what I owe at the end of the year. I hope that helps a few people out.

yellobutterfly Posted 30 Aug 2011 , 6:52pm
post #75 of 86
Quote:
Originally Posted by sillywabbitz

I wanted to post a quick note. I spoke with my friend who is a tax accountant regarding all of the different stuff. I was speaking with her regarding paying sales tax on supplies and charging sales tax. When I told her that we do not charge sales tax on the cakes because it's a food item, she pointed out then that the tax id from the state to avoid paying sales tax on ingredients and supplies is pointless. If you do not charge sales tax on the finish goods, you still owe sales tax on the ingredients and supplies. Basically the state gets their money one way or the other. Based on that info, I figure I'll buy wholesale but not tax free. Easier to pay it as I go then try and figure out what I owe at the end of the year. I hope that helps a few people out.




is there a way to buy wholesale without the tax id?

djbookkeeper Posted 30 Aug 2011 , 7:24pm
post #76 of 86

Be aware that there are different types of tax ID's. Wholesalers will either require a FEIN or a sales tax permit. Check with the wholesaler you want to do business with and see what they require.

sillywabbitz Posted 30 Aug 2011 , 7:30pm
post #77 of 86

yellobutterfly,
djBookeeper is correct there are different types of tax ids. There is a the Federal Tax Id known as a FEIN. You can get this online and it's free from what I've read so far. You should do this because it keeps you from having to give out your social security number when you register your business for your DBA and for wholesalers. There is also a state sales tax id which is the one I was mentioning. The state tax id is the one you need so that you do not pay sales tax on supplies and ingredients.

Different wholesalers will have different rules about what they require. So just check based with the wholesalers you want to order from. Hope that helps a little.

yellobutterfly Posted 30 Aug 2011 , 9:17pm
post #78 of 86
Quote:
Originally Posted by djbookkeeper

Be aware that there are different types of tax ID's. Wholesalers will either require a FEIN or a sales tax permit. Check with the wholesaler you want to do business with and see what they require.



thank you for explaining icon_smile.gif

yellobutterfly Posted 30 Aug 2011 , 9:18pm
post #79 of 86
Quote:
Originally Posted by sillywabbitz

yellobutterfly,
djBookeeper is correct there are different types of tax ids. There is a the Federal Tax Id known as a FEIN. You can get this online and it's free from what I've read so far. You should do this because it keeps you from having to give out your social security number when you register your business for your DBA and for wholesalers. There is also a state sales tax id which is the one I was mentioning. The state tax id is the one you need so that you do not pay sales tax on supplies and ingredients.

Different wholesalers will have different rules about what they require. So just check based with the wholesalers you want to order from. Hope that helps a little.



thanks so much!

HavenwoodGoodies Posted 1 Sep 2011 , 10:14am
post #80 of 86

So Excited!!

rlowry03 Posted 11 Sep 2011 , 1:40am
post #81 of 86

Another tax question...
Can someone explain the use tax? Filing for the tax exemption includes "sales and use tax." I get sales tax, I do not get use tax. I've found several definitions.

Here's the first part:
A purchase may be subject to use tax for a number of reasons. The most common reasons are:
- You used property purchased with a resale certificate. If you use a resale certificate to purchase merchandise that you intend to resell, your supplier will not collect sales tax. However, if you use the merchandise for another purpose before you resell it, you are liable for use tax. (Using merchandise for display or demonstration purposes before the property is sold is not subject to use tax. But, providing free samples to customers is a use and you would owe tax on the amount you paid for the samples.)
- You used property purchased with an exemption certificate. If you use an exemption certificate to purchase taxable items, your supplier will not collect sales tax. However, if you use the merchandise or service for a non-exempt purpose, you are liable for use tax. (Purchasing manufacturing equipment but using it to perform contractor work is a non-exempt use.

I wonder if the second part applies because we can purchase taxable things like decorating bags but then we use them to make the cake. Is that contractor type work or is it exempt because it's for food?

Part 2: Do I owe tax on goods purchased via mail-order catalogs or Internet merchandise?
Yes. A seller who uses catalogs or the Internet to sell goods is treated the same as any other seller of taxable items. If you purchase merchandise through a catalog or the Internet from a seller located in Texas, you owe Texas sales tax on the purchase. If you purchase merchandise through a catalog or the Internet from a seller located outside of Texas and use the taxable item in Texas, then you owe Texas use tax on the purchase.

I found this at http://www.window.state.tx.us/taxinfo/sales/faq_use.html. There are some other websites the Texas Tax site links to, but none of the laws are very clear to me...

djbookkeeper Posted 11 Sep 2011 , 2:32am
post #82 of 86

Keep in mind the big picture - home bakers won't need to charge sales tax on baked goods. My understanding is sales tax is only charged upon immediate consumption, i.e. a restaurant.
Ideally, I would suggest just using the sales tax ID to gain access to a wholesaler. When you do purchase, pay sales tax if you can. If the wholesaler won't collect sales tax, you do need to pay the Comptroller for whatever sales tax you should have paid.
You need to pay sales tax on whatever you purchase. The purpose of the sales tax re-sale certificate is to avoid sales tax being charged on one item when it is purchased several times. You aren't re-selling anything so you need to pay the sales tax. Pay the sales tax and avoid worrying about the use tax.
Just a word of warning - I have seen an increase in sales tax audits this year! 2 of my clients were randomly audited this year and in my previous 15 years, I had never encountered a sales tax audit. I learned from the audits that once the auditors quickly established that sales tax was being charged correctly, what they were really looking for was internet purchases. Anything you purchase over the internet and are not charged sales tax for should be reported as a use tax.
Hope that helps a little and doesn't confuse the issue!

rlowry03 Posted 11 Sep 2011 , 2:48am
post #83 of 86

So if we buy supplies over the internet, we have to pay taxes on them? And if I buy things that I don't intend to sell, like decorating tools, I have to pay tax on those too? I would have thought it would benefit me to buy those things online, but it looks like either way I have to pay tax.

djbookkeeper Posted 11 Sep 2011 , 3:08am
post #84 of 86

Yes, either way you should pay sales tax on the materials you purchase to make your baked goods as a home baker.

rlowry03 Posted 11 Sep 2011 , 5:26pm
post #85 of 86

All this made me think of another question. If I buy something online that wouldn't be taxable as part of the cake, like a cake board, do I have to pay tax on it because it was purchased online?

Is there some way to show on the tax returns that I already paid taxes on items if I choose to pay it when I purchase it instead of paying it later as a use tax? I just wonder if I send in forms with $0 owed in taxes, even though I did it legally and already paid the taxes, if that won't alert the IRS and make it more likely to get audited which is really not what I want even though I'm following all the rules!

djbookkeeper Posted 11 Sep 2011 , 9:42pm
post #86 of 86

I know this is all very confusing. I really recommend you get someone to help you with your books.
IRS has absolutely nothing to do with sales tax. If you ever have any sales tax to pay, you'll pay the TX State Comptroller. The Comptroller will the one doing any sales tax audits which are different than income tax audits.
If you purchase a cake board online and don't pay sales tax, you should report it to the Comptroller on your quarterly sales tax report and pay a use tax. The only time anything is tax-exempt is if you are going to sell it to someone else.
Pretty much anything you buy for your cakes should have sales tax charged to you. You won't be collecting sales tax for your cakes.
Hope that helps!
You're welcome to email or call if that would help in understanding all this.

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