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.