Sams Mom Posted October 2, 2004 Report Share Posted October 2, 2004 Is there a quilter's guide to sales tax dos and don'ts? For example, if you don't have a specific line item thread charge, but you buy your thread wholesale, are you supposed to include a sales tax? Same question for batting. I comped a batting the other day, should I still include a sales tax? Link to comment Share on other sites More sharing options...
JudyL Posted October 2, 2004 Report Share Posted October 2, 2004 I believe every state has different rules and the best thing to do is check with your local taxing authority. Here in KY, I have to charge sales tax even on services so the entire bill is taxed. Now, we're even having to tax shipping charges IF they go over the actual cost of shipping and all handling charges are taxed. So, if I charge a fixed $15.00 for S&H and the actual cost is $12.50, then I owe sales tax on the $2.50 but I never know absolutely what the actual shipping costs are til I get the Fed Ex bill. I could get real close by weighing the package on my digital scale but that's only AFTER it's quilted and I get paid BEFORE I quilt. I even have to pay sales tax on my machine since I didn't pay sales tax when I bought it. There are days when I feel like I should just lay every dime on the table and tell them to take what they want and leave me the rest . . and I know it would be very little! Here, I pay sales tax on *everything* unless it is delivered or mailed out of KY. If I buy batting wholesale from Hobbs and use it in my own quilts, I have to pay sales tax. You really should call your local taxing office to be safe. Link to comment Share on other sites More sharing options...
White Rooster Posted October 3, 2004 Report Share Posted October 3, 2004 I'm sorry to hear that KY is as tax happy as CA. Here we also pay sales tax on services as well as product. I include a separate thread charge ($.50 per bobbin) just so that I'm not questioned later about buying it wholesale. I also charge separately for the batting. One of the other local LA quilters was audited a few years ago. She had to pay sales tax on all of her previous thread purchases even though she said it was included in the "services" charge. The reason: A portion of her thread had been used for store samples and for other non-client quilts. That constitutes "personal use" and she didn't have a breakdown of how much thread was used for these purposes. FYI: I write up a full invoice when I do a charity quilt and I pay the sales tax accordingly. I do this because the total amount is a tax write-off and in the event of an audit I have documentation. Like Judy said, contact your local state tax board for regulations. Hopefully they won't be as tax happy as CA and KY. Link to comment Share on other sites More sharing options...
Giftedhands Posted October 4, 2004 Report Share Posted October 4, 2004 If I quilt - it is considered a "service". If I buy wholesale and pay no tax to the vendor, then I do owe tax on my resale (batt is $15 wholesale, I charge $30, so I owe tax on the $15). Since I don't charge for thread (how do you quilt without thread?), there is no tax for that either. I carry batting "just in case" but I advise clients to bring their batting with them or send it with their quilt. Cynthia Link to comment Share on other sites More sharing options...
White Rooster Posted October 5, 2004 Report Share Posted October 5, 2004 GA must be completely different because in CA you charge the client sales tax on the retail price, not what you paid for it. And if we don't pay sales tax to our supplier then we must, 1) pay the tax on what we purchased directly to the State Board of Equalization ourselves, or 2) charge the client for the product & add the sales tax. If, as you said, the client isn't charged for the thread then we become responsible for the sales tax or we need to prove that the thread is included in our charge for "service", which is also taxable. Bottom line, the sales tax must be paid by either the client or the business. There is no way we can avoid it in CA. FYI - Many states are clamping down on the online purchases people make from out-of-state companies when no sales tax has been charged. Individuals have been getting away with this for a long time but according to the sales tax regulations the tax is due to the state where the product was delivered. Out-of-state companies say it isn't their responsibility to pay it and consumers certainly aren't standing in line to pay it either. Unfortunately, it can be tracked with businesses because we file income tax statements that show cost-of-sales purchases and the IRS shares info. with other taxing agencies. I know this is more than anyone wanted to know but audits can be nasty. Can you tell that in another life I was an accountant? No wonder I like quilting so much . . . . . Link to comment Share on other sites More sharing options...
BarbWetzel Posted November 16, 2004 Report Share Posted November 16, 2004 Judy... Try using UPS... it is cheaper and you can send it by ground service. Barb Link to comment Share on other sites More sharing options...
JudyL Posted November 16, 2004 Report Share Posted November 16, 2004 Barb: I've found that Fed Ex Ground is usually less expensive than UPS Ground. Fed Ex is a couple of buildings down from where DH works so he drops my packages there. I just sent a box to my mom and I checked both Fed Ex and UPS Ground. Fed Ex Ground was $7.55 and UPS Ground was $9.27. But, with either, when I add insurance and the signature for delivery, the cost for shipping a quilt is usually $12 - $15. Link to comment Share on other sites More sharing options...
BarbWetzel Posted February 13, 2005 Report Share Posted February 13, 2005 Judy... Let me know if you have ever had any problems with your deliveries using FedX. Barb Ivy Corner Quilting Altoona, Ia. Link to comment Share on other sites More sharing options...
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