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Lemon Tree Tami

Question for CA on taxing

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Hi, well it turns out that we're moving from Cheyenne, WY back to the Bay area of CA. Luckily we found out just before APQS put my machine on the truck that's headed to HMQS. (Cheyenne's along the way so they would have just stopped to deliver it to our house.) So now I have to get things ready to start a business in CA instead of WY. Already I've started the paperwork for a DBA but now my question is about the resale license and taxing. I'm pretty sure that I should get a resale license so that I can get thread and batting wholesale and then "resale" it to my customers. But I thought that in CA you don't tax labor. Wouldn't quilting be something that you added to an existing product (the top and backing) so that it's not manufacturing?

 

Anyone doing business in CA can you chime in please? We'll be back by the end of May .. my machine should be delivered in June and I hope to start the business going a few months later, just in time to get the Christmas rush.  :D


Cheers,

Tami Levin

Sunnyvale, CA

http://www.lemontreetales.com

http://www.thequiltedlemon.com

APQS Freddie with IntelliQuilter

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Sounds like you have a plan and your journey begins! 

I hope someone chimes in here about the tax questions. Perhaps contact a California dealer to ask your questions.

A business accountant can help as well, but sometimes they don't understand the longarm business. Here in Washington I had the option of classifying the business as a service (no sales tax on the labor) or manufacturing (labor is taxed). It was determined that the business is classified as manufacturing so we charge sales tax on everything.

Hope you move is easy and uneventful. Good luck in California!


Linda Rech

Finely Finished Quilts

Millennium on Bliss rails--hand-guided

http://www.topperquilttools.com

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Thanks Linda. I'll have to ask one of the California dealers for some tips. I just got back a business policy quote from State Farm. OMG they quoted something that was 3x what the one in WY did. It has to be a mistake. Yikes!


Cheers,

Tami Levin

Sunnyvale, CA

http://www.lemontreetales.com

http://www.thequiltedlemon.com

APQS Freddie with IntelliQuilter

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Keep looking around for insurance. You want to of course cover your equipment and inventory. As far as liability for customer issues--if a quilt is damaged/lost you'll be liable for replacement cost of materials. For personal liability for someone being injured on your property (like while picking up a quilt) you can side-step that by doing pick-up and drop-off off premise, perhaps at a local shop. We have a rider to cover replacement for my machine and some inventory. I keep fewer than five quilts in the studio at one time. Most insurance companies don't understand what this business entails so best to find a comparable home-based business so you can be armed with facts to sway them to a less expensive policy. If you're covered in WY, the same insurance company should have comps in California or else they don't understand what's involved in your business. Can the two companies share some information?

When you get some info from an APQS dealer in California, ask them as well what they do for insurance.


Linda Rech

Finely Finished Quilts

Millennium on Bliss rails--hand-guided

http://www.topperquilttools.com

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For Lemon Tree Tami,

Best wishes to you on your move to CA! The CA State Board of Equalization has a website where you can find answers to many questions you may have as you launch your business in your new state.

Having had my business here for over sixteen years and having asked the same question and heard every possible interpretation of the "rules" from other longarm business owners, I would suggest you go to the source and follow the printed guidelines.

We are considered manufacturing since the client brings us components and we return to them a completed product made with those components. Our labor is taxable. If we repair a quilt, that is not taxable, as I understand the code. HTH.

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Yes, we have to charge sales tax on our labor in CA. Even with returning quilts w/o binding or not completely finished.


Merry Jo

Merry Jo Rembold, Julian, CA

APQS Sales Representative

Millie & Quilt Path

Facebook: Creative Quilting by Merry Jo

Merryjorembold.com

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