Selling Products

Business By Tomoore Updated 31 Jan 2007 , 9:50pm by CrystalsCakes5

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Tomoore Posted 25 Jan 2007 , 4:59pm
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Hey Guys...
What do you have to do to purchase products at wholesale from companies and sell them retail?

9 replies
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jeking Posted 25 Jan 2007 , 5:06pm
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I believe that you just have to have a tax ID issued by your state/county. That would mean registering a business name with your local city officials and paying a occupational license fee.

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Tomoore Posted 25 Jan 2007 , 5:13pm
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...which should not require anything from the Health Dept, right. Should be a relatively simpler process?

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indydebi Posted 25 Jan 2007 , 5:18pm
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Quote:
Originally Posted by Tomoore

...which should not require anything from the Health Dept, right. Should be a relatively simpler process?




As long as it's not involved in food prep. If you are buying cake decorating supplies wholesale and selling them retail, that's fine. If you are buying candy disks in 10 lb bags and repackaging them into 1 lb bag; .... if you are buying vanilla concentrate and then repackaging it into the smaller jars, diluted, then you may be considered a food packaging operation and will need health dept approval. Check with your local state guidelines, depending on what you are selling.

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CrystalsCakes5 Posted 28 Jan 2007 , 9:01pm
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I dont believe you have to have a tax ID number, you have to have a Sales and Use Tax number.

If you buy something and resell in the same state that you live you have to collect sales tax, if you sell in another state, you do not have to collect sales tax.

This number works for resale and if you buy wholesale and use it yourself.

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JasonL Posted 29 Jan 2007 , 3:06am
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So in KY do you still collect tax on cakes since there is no tax on grocery items and no tax on labor

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SweetConfectionsChef Posted 29 Jan 2007 , 3:16am
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Quote:
Originally Posted by CrystalsCakes5

I dont believe you have to have a tax ID number, you have to have a Sales and Use Tax number.

If you buy something and resell in the same state that you live you have to collect sales tax, if you sell in another state, you do not have to collect sales tax.

This number works for resale and if you buy wholesale and use it yourself.




A tax ID # and Sales and Use Tax # are the same thing. I guess different states might call them different things.

The best bet Tomoore is to call your state comptroller's office and they can give you all the information you need. Sales tax can be really confusing!

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indydebi Posted 29 Jan 2007 , 3:18am
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Quote:
Originally Posted by JasonL

So in KY do you still collect tax on cakes since there is no tax on grocery items and no tax on labor




In Indiana, there is no tax on grocery items, but there is a tax on ready-to-eat items (bakery, deli, fast food, etc), so check with your state to find out what you should be collecting sales tax on.

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Jorre Posted 29 Jan 2007 , 7:48am
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Quote:
Originally Posted by CrystalsCakes5

I dont believe you have to have a tax ID number, you have to have a Sales and Use Tax number.

If you buy something and resell in the same state that you live you have to collect sales tax, if you sell in another state, you do not have to collect sales tax.

This number works for resale and if you buy wholesale and use it yourself.




Actually that is incorrect. Sales Tax collection is determined by *Nexus* and depending on the presence of your business in ANY state, irregardless of where your offices actually are, you can be required to collect and remit sales taxes. The laws for determining if you have Nexus in each state also vary by each state (fun, fun, fun!). Some states say you have Nexus with them if a certain percentage of your sales are in that state, some require a physical office or employee and so on.

Use Tax *is* sales tax in essence. What happens is if you order item X from a company in another state who does not have Nexus in the state your company is in, they will not charge you sales tax. You are then responsible for accruing and remitting the amount of tax you would have paid for item X if they had charged sales tax and submitting it to the state as *Use Tax*. Nothing is tax free....you either have to pay sales tax or use tax UNLESS you are reselling it (in which case you have to collect sales tax and the amount you sell it for) or under some specific circumstances that make it a non-taxable item (generally only certain items such as a custom software or services).

Services are generally tax-exempt, so is food (but not *prepared* foods such as a restaurant meal) in most states.

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CrystalsCakes5 Posted 31 Jan 2007 , 9:50pm
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Jorre,
What is incorrect about what I said?

And actually you are incorrect about food being tax exempt. Food bought from someone else and resold is subject to local county tax, food prepared is subject to local and state tax.

We have a motorcycle repair shop and we also buy and sell bikes and parts. One of the easiest ways we deal with this is we always pay the sales tax on anything we purchase whether it be a bike or parts to repair a customers bike, tools, supplies and such. That way the tax is already paid on that item.
We sell used parts on Ebay. We only have to charge slaes tax if the purchaser is in NC. The person buying the item is responsible to pay there on tax in there state, not the NC tax rate.

If you buy from a wholesaler, you will have to charge tax to your customers. Food that you prepare yourself to sell is considered "prepared food", it is subject to all sales tax. Of course this is the laws for NC. If you are a home baker that does just a little business, you could just add the sales tax amount to the price you would normally charge and not specifically say to your customer it is for tax. Some people get upset when they think that you are charging them tax.

If you buy something wholesale and use it yourself that is the "use" part of the tax, and you would need to pay tax on it also. I would try and pay the tax on product as I purchased it and that way it is much easier to keep up with.

The website that I go to for this is the NC Dept. of Revenue. I guess there is a separate website for each state.

I hope this helps and hope that I have not told you anything that is incorrect.

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