Tax exempting store use items

[SkyHog]

Dumb business owner question of the week:

Lets say I have CDRs that are used for the business, but not sold to any customers. They may, however, be included with other work being done. Can I tax exempt the purchase of such items?

Lets go a step further and include cleaning supplies and other products used for a customer, but not expressly sold to them...

 

[markb5900]

Hard to answer this one Nick, since it is dependent on your state laws somewhat.
You will need to get an exempt ID number to give to your suppliers for things that ARE allowed though.
Your state "IRS" should be able to give you a list of what you can and cannot exempt.

Hope that helps a little

Mark

 

[SkyHog]

ooh - new question:

I buy gasoline while on a job, for related reasons. Can I old write off the mileage, or can I write off the cost of gasoline as well? Or is it either/or?

 

[mikea]

ooh - new question:

I buy gasoline while on a job, for related reasons. Can I old write off the mileage, or can I write off the cost of gasoline as well? Or is it either/or?

It's either or.

 

[flyingcheesehead]

Dumb business owner question of the week:

Lets say I have CDRs that are used for the business, but not sold to any customers. They may, however, be included with other work being done. Can I tax exempt the purchase of such items?

Lets go a step further and include cleaning supplies and other products used for a customer, but not expressly sold to them...

Nick,

I assume you're talking sales tax. The way it works up here (which, of course, may not be the way it works down there) is pretty much, if you're going to charge tax on something when you sell it to your customer, you don't pay tax on it.

So, you buy a widget from distributor A to sell to customer X. You collect sales tax from the customer and pay it to the state. You should not pay sales tax to the distributor. If you pay sales tax to the distributor, and you keep your records properly, you can deduct the sales tax you paid from what you pay the state (because the distributor would theoretically have paid it).

Now, by CDR's I assume you mean you're going to be burning CD's that you sell to the customer with some stuff on them. Again, you should not have to pay sales tax when you purchase them, as you're selling them as part of a taxable product.

Where it gets a little tricky is with service. Up here, if service is part of a tangible item, it's taxed, otherwise not. So, if I were to go to a client and help them with computers that were already installed (so all I'd be billing them for on that trip was my time), I did not charge my customer sales tax and did not pay it to the state. However, if I were to go install a new computer or anything involving the installation of a new product, my time was then taxable.

Again, this only applies in Wisconsin, but it's a decent example. What you need to do is find yourself a good small business lawyer and a good accountant locally. I bet Don Jones could point you in the right direction.

BTW, you using QuickBooks?

 

[SkyHog]

Nick,

I assume you're talking sales tax. The way it works up here (which, of course, may not be the way it works down there) is pretty much, if you're going to charge tax on something when you sell it to your customer, you don't pay tax on it.

So, you buy a widget from distributor A to sell to customer X. You collect sales tax from the customer and pay it to the state. You should not pay sales tax to the distributor. If you pay sales tax to the distributor, and you keep your records properly, you can deduct the sales tax you paid from what you pay the state (because the distributor would theoretically have paid it).

Now, by CDR's I assume you mean you're going to be burning CD's that you sell to the customer with some stuff on them. Again, you should not have to pay sales tax when you purchase them, as you're selling them as part of a taxable product.

Where it gets a little tricky is with service. Up here, if service is part of a tangible item, it's taxed, otherwise not. So, if I were to go to a client and help them with computers that were already installed (so all I'd be billing them for on that trip was my time), I did not charge my customer sales tax and did not pay it to the state. However, if I were to go install a new computer or anything involving the installation of a new product, my time was then taxable.

Again, this only applies in Wisconsin, but it's a decent example. What you need to do is find yourself a good small business lawyer and a good accountant locally. I bet Don Jones could point you in the right direction.

BTW, you using QuickBooks?

yeah, I'm using quickbooks, that's what is bringing me to all these questions. I have a bunch of expenses, and I'm trying to figure it all out. Now that I have some business income, I'm going to see an accountant very shortly to get everything figured out.