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[Biz Talk] Tax Man


#1

May be a silly question to some, but… If im going to be piece meal
on jewelery for 2 locations that are retail, would I need to claim
any local tax on items sold the these locations when? Do you HAVE to
have a business licence when taxes are involved or a Tax ID? I have
accounts setup with other vendors for supplies, tools, Stuller, Rio,
Otto, etc…I have W2’s from these 2 location, and will claim on my
tax…just not sure what I need to keep in mind as wholesale work is
involved.

Thanks!
B.


#2

you can get an employer identification number from IRS or use your
SS number for federal taxes. State and local taxes vary by state and
locality. since i keep my business seperate from personal, i have an
EIN (i am only employee) for taxes. This can be done online and is
free. For my state, I completed a state business license and was
classified as a “yard sale” thus I don’t have to collect sales tax.

john


#3

If you get W-2 forms, you’re an employee, and I would expect your
employer to handle all the tax and licensing matters.

Anyway, this is probably not the best place to ask this kind of
question, especially since you don’t even say what your location is.
If you’re in the US, the Secretary of State’s office for the state
is generally the place to start for business though they
will probably refer you to their revenue department for tax issues.

Business licensing and taxing is a government function. Ask the
government.

Al Balmer
Sun City, AZ


#4
For my state, I completed a state business license and was
classified as a "yard sale" thus I don't have to collect sales
tax. 

That’s interesting. What state is that? I seem to remember NY
classified a garage sale as no more than (3?) days a year, and some
limit on amount of sales. I’ve never checked AZ, though I live there
now.

Al Balmer
Sun City, AZ


#5
I have W2's from these 2 location 

I’m very unclear as to your exact relationship with these two shops.
Would you explain more how you work with these shops?

If you get W-2s you are technically an employee, which means you
can’t deduct things like materials, supplies, etc.(in some cases
tools can be deducted but look carefully at the criteria for that)
which if you are truly an employee you shouldn’t be paying for
anyway. They also have to withhold income tax etc. It also means your
employer can’t sue you for losses.

Are you buying materials and then reselling them to the shops (with
value added labor)? Are you doing this from your own space?

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

should shed some light on it for you. If you are indeed an
independent contractor they should give you a 1099 not a W2. You then
are responsible for regular tax payments. If you simply sell them
completed merchandise there are no taxes declarations involved and
you are a vendor, you do your own taxes, they do theirs.

would I need to claim any local tax on items sold the these
locations when? 

By that do you mean sales tax? Sales tax is the responsibility of
the seller not the employee/contractor/supplier.

Do you HAVE to have a business licence when taxes are involved or
a Tax ID? 

Pretty much yeah. Sometimes you can be a business under your own
social security number but there are limitations. If you collect tax
or withhold you definitely need a tax #. If you operate under your
own SS# you should have a separate checking account (Britten Wolf
dba… or ‘Business Account’) and really avoid co-mingling of funds,
its much easier to account for things this way.

You really need to sort this out. Try score.org

One other thought. If you have any meaningful exposure at all (such
as you are responsible for high value customer’s goods, or you have
open accounts for materials and your customers don’t pay you so you
can’t pay your creditors) it is advisable that you incorporate to
insulate your personal finances from claims. But if you become a
company you have to act like a company or else the corporate veil
can be pierced by a creditor. What to do really depends on how much
money is at stake vs what the setup costs are.


#6
May be a silly question to some, but... If im going to be piece
meal on jewelery for 2 locations that are retail, would I need to
claim any local tax on items sold the these locations when? Do you
HAVE to have a business licence when taxes are involved or a Tax
ID?...just not sure what I need to keep in mind as wholesale work is
involved. 

Generally a business license is at the local level–county and/or
city. Some require it, some don’t. Contact your local Chamber of
Commerce.

A sales tax license is something different, and is usually involved
at the state level. Yes, you do need this one, even if you don’t
collect sales tax (excise tax), but you are required to report all of
your sales, as well as personal use tax. Some business entities are
not required to collect sales tax on specific things, such as an
exclusion for taxing food which requires some type of preparation
before consumption.

States differ on what is claimed for personal use tax, such as only
materials you use for personal consumption. In Wyoming, we have to
pay personal use tax on anything that is not visible in the final
product. This includes pickle, buffs, polishing equipment,
manufacturing equipment, or anything other than the metals, solder
and stones that are used and visible to the consumer.

Sales tax is paid by the final consumer, whether it’s you for your
tools, or a retail customer. If you sell wholesale to a retail
outlet, they collect the tax from the retail customer and file their
own taxes. A sales tax license is kept on file by suppliers so you
don’t have to pay taxes on items you will use for resale. They
collect taxes on the items that are not tax exempt, such as is used
in manufacturing, and then they remit those taxes to the state excise
tax division. Contact you state department of revenue for the
procedures.

Income tax is collected from the federal level. You use an Employer
Identification Number (EID), which is absolutely necessary if you
have employees. Otherwise if you only have yourself or contractors,
you only have to provide your Social Security number. Contact the
U.S. Department of Revenue.

A shortcut to all the red tape, including the issues above, is to
contact your state SBDC (Small Business Development Center). They are
familiar with all the issues you’ve asked and can help you through
it. Consultation is free. Other business development training is
either free or very low cost. This can include marketing, product
development, product pricing, requirements for selling in other
countries, and promotion of your business. Some SBDC also have spin
offs that are for shoestring operations that can underwrite expenses
for business training, business supplies, design services,
tradeshows, and classes and workshops in your field.

I have a daughter who works for the Wyoming Department of Revenue,
and a son who works for the Wyoming Womens’ Business Center. I have
been a client of Wyoming SBDC. The daughter began as a tax
accountability specialist and helped people to figure out which taxes
they needed to pay and which taxes were exempt. The son is a graphic
designer and helps people with their product packaging design, web
design, business card design, logo design, etc. As a client of SBDC,
they helped me to get into markets, seminars and cooperative
tradeshows I otherwise wouldn’t have been able to afford.

It is commendable that you are doing your business with all the i’s
dotted and t’s crossed. The more you know about how a business is
run, the more inclined your business will be to attain success and
prosperity.


#7

Unless you are an employee of these locations, you should not be
getting a W-2. For any contract work, you should be getting a 1099.
For wholesale, you should get an inventory listing of stock still in
inventory. For items that have sold, you deduct the Cost of Goods
Sold; which includes materials such as metal or stones or glass,
supplies - suchas bur life, burs, saw blades, polishing compound,
etc.; transportation costs can also bededucted, as well as your
utilities relating to the business, and any health insuranceyou have
procured for yourself. Then you pay taxes on the amount left over.
That is your income.As for local taxes, you should only be liable
for taxes in the area you have registered yourbusiness, and you
should only pay on sales taxes if you sold anything directly,
because the gallery collectssales tax at the time of purchase. You
can be held liable for a use tax, which is a tax on
equipement/supplies that werepurchased sales-tax exempt.There may be
additional taxes if you have county or city taxes, but I would
contact the county tax collector for more

Susannah Page-Garcia