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Applying tax to my sales question

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Welder6131
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Applying tax to my sales question

Post by Welder6131 » Tue Mar 15, 2022 9:00 pm

Evening everyone,

I was curious how sales tax works when you sell a plasma cut product. I wasn't sure if I need to charge state and federal tax for my items to include both materials and labor or just my labor cost or vice versa. I only ask, because it seems kind of silly for me to buy a sheet of steel and pay tax on that steel just to turn around and pay tax on that steel again when I make something from it.

I am sure there are plenty of small business owners out there that deal with this all the time. I appriciate any guidance in advance

Thanks,
Josh

adbuch
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Re: Applying tax to my sales question

Post by adbuch » Wed Mar 16, 2022 12:52 am

Josh - generally if you have a business, then you have a state tax ID number associated with your business license. You would submit a copy of your tax license to the business you are purchasing your materials from and thus become "tax exempt"as you are purchasing items for "resale". However, when you sell your product, you would then charge sales tax to your end customer and keep track of this so that you can remit your collect sales taxes to your state department of revenue.

If you are selling a finished product, then you would collect sales tax on the entire sale price. If you are doing customer work where you are creating an item for a customer per their design requirements, then in that case you would only collect sales tax for the materials - and not your labor.

If you sell on Ebay, then Ebay collects state sales tax from your customer and you wouldn't need to worry about it. I would expect that Etsy may do the same as Ebay. If you are selling from your own website, then you may (or may not) charge sales tax at your own discretion.

I sell my products (finished goods) on both my own website and my Ebay store. Ebay collects state sales taxes based on the state the buyer is located in. They charge sales tax on both the goods and the shipping cost. At my website, I don't currently charge state sales tax for any of my products.

David

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Re: Applying tax to my sales question

Post by mdwalker » Wed Mar 16, 2022 9:22 am

Contact your state tax commission. They are the ones who can give you accurate information.
Danny Walker
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Walker Manufacturing
Tishomingo, Oklahoma USA
www.walkermfg.net

adbuch
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Re: Applying tax to my sales question

Post by adbuch » Wed Mar 16, 2022 3:04 pm

mdwalker wrote:
Wed Mar 16, 2022 9:22 am
Contact your state tax commission. They are the ones who can give you accurate information.
Info provided is accurate in Arizona, and I expect in other states as well.
David

Welder6131
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Re: Applying tax to my sales question

Post by Welder6131 » Thu Apr 21, 2022 9:44 am

Thank you for all the replies, sorry for the late response. This really helps!

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Re: Applying tax to my sales question

Post by adbuch » Thu Apr 21, 2022 5:06 pm

Welder6131 wrote:
Thu Apr 21, 2022 9:44 am
Thank you for all the replies, sorry for the late response. This really helps!
:Like :Like :Like

RPM
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Re: Applying tax to my sales question

Post by RPM » Tue Apr 26, 2022 9:25 pm

Here in TN if you are taking raw material, sheets of steel and making a product out of it. You are classified as a manufacture and you don't pay sales tax on machinery used in the shop or tools used in the shop. From a plasma cutter down to a drill bit.

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Re: Applying tax to my sales question

Post by adbuch » Tue Apr 26, 2022 9:31 pm

RPM wrote:
Tue Apr 26, 2022 9:25 pm
Here in TN if you are taking raw material, sheets of steel and making a product out of it. You are classified as a manufacture and you don't pay sales tax on machinery used in the shop or tools used in the shop. From a plasma cutter down to a drill bit.
Doesn't work that way in AZ. Here as a manufacturer, we pay no sales tax on materials (assuming we have a state resale license) and collect the sales tax when the item is sold. We do pay sales tax on purchased machinery, equipment, tools, etc. but these can be either depreciated or expensed against business income.

David

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