sales tax

[149motorsports]

I was just looking through my quickbooks expenses and saw they had sales tax as a write off, is this true, i can write my quarterly sales tax off? my accountant never told me this:Oops:

 

[Gene@mpls]

You shouldn't have to pay tax on tax- don't know if I would call it a write off.

 

[Fred Weiss]

You can write it off if you count the collection of it in sales. The reason for this would be if your state, like most, allows you a small discount for collecting their tax for them. That way the discount you take is what's left and counted as profit.

For example, in my state the rate is 6.5% and we get a 2% fee of the tax collected for collecting and reporting. Therefore on $1000 in taxable sales I actually charge $1065.00. The report goes like so:

Total sales = $1000.00
Tax Collected = $65.00
Total Sales with Tax = $1065.00
Total Due Dept of Revenue = $65.00
Dealer Discount = $1.30
Amount Enclosed = $63.70

Quickbooks Accounting would go like so:

Gross Sales with Tax = $1065.00 (Credit)
Gross Tax Remitted = $63.70 (Debit)
Gross Sales = $1001.30

 

[binki]

Wow, we dont get a chop in The Peoples Republic of California.

I would also add you will remit your final sales tax payment after your fiscal year ends so you will have 'income' from sales tax and a recorded liability. If you operate on a cash accounting basis for taxes then you report the income in one period but expense it in the next.

 

[149motorsports]

thanks fred, i get 1% back to me for collecting.

 

[149motorsports]

i use the cash method...i pay sales tax to the state 4 times a yr, basically every 3 months Jan 1 to March 31,ect.

This may be dumb question, but i took the total sales from jan 1 to march 31 2008, and paid the 7% sales tax (quarter 1). now i would take the sales from April 1 to june 30 2008 (quarter 2)and pay the 7% sales tax on the amount correct? i know not all of us have the same schedule,ect. thanks!

 

[mondo]

i use the cash method...i pay sales tax to the state 4 times a yr, basically every 3 months Jan 1 to March 31,ect.

This may be dumb question, but i took the total sales from jan 1 to march 31 2008, and paid the 7% sales tax (quarter 1). now i would take the sales from April 1 to june 30 2008 (quarter 2)and pay the 7% sales tax on the amount correct? i know not all of us have the same schedule,ect. thanks!

Thats what I do actually. I also double check on the invoices from that quarter.

 

[149motorsports]

yes i have quickbooks and i also have a paper book that my accountant told me to write it all down in (so i got 2 books).. its time to pay tax tomm.

 

[cgsigns_jamie]

You can write it off if you count the collection of it in sales. The reason for this would be if your state, like most, allows you a small discount for collecting their tax for them. That way the discount you take is what's left and counted as profit.

For example, in my state the rate is 6.5% and we get a 2% fee of the tax collected for collecting and reporting. Therefore on $1000 in taxable sales I actually charge $1065.00. The report goes like so:

Total sales = $1000.00
Tax Collected = $65.00
Total Sales with Tax = $1065.00
Total Due Dept of Revenue = $65.00
Dealer Discount = $1.30
Amount Enclosed = $63.70

Quickbooks Accounting would go like so:

Gross Sales with Tax = $1065.00 (Credit)
Gross Tax Remitted = $63.70 (Debit)
Gross Sales = $1001.30

Holy Moly! We've been paying sales tax to the good old state of Florida for 21 years and had no idea this existed. I guess I need to check with my CPA and see if we can do the same, and why I didn't know about this sooner!

 

[Fred Weiss]

Holy Moly! We've been paying sales tax to the good old state of Florida for 21 years and had no idea this existed. I guess I need to check with my CPA and see if we can do the same, and why I didn't know about this sooner!

I stand corrected. The discount is actually 2.5%. Your accountant has either been handling that for you without you knowing it or you should refile for as far back as the Dept. of Revenue will allow. If you haven't been taking it, you might want to shop for a new accountant.

 

[Valleysigns]

Think we are talking two diffenent credits. The collection credit should be part of you tax return calculations. The credit for tax paid on a product and charged again is another.

Bought roll vinyl $100 + $7.00 tax. $7.00 expense. Sold vinyl $110. Tax $7.70 owe $.70 additional. Will usually show $110. sales and pay $7.70 in taxes again, meaning on $100. vinyl paid $14.70 in tax..OMO

 

[cgsigns_jamie]

Think we are talking two diffenent credits. The collection credit should be part of you tax return calculations. The credit for tax paid on a product and charged again is another.

Bought roll vinyl $100 + $7.00 tax. $7.00 expense. Sold vinyl $110. Tax $7.70 owe $.70 additional. Will usually show $110. sales and pay $7.70 in taxes again, meaning on $100. vinyl paid $14.70 in tax..OMO

You should not be paying tax on your supplies, at least not in Florida. Your suppliers should have a copy of your sales tax certificate. Otherwise the state would collect tax twice on the products you sell, I think double taxation is illegal.

 

[149motorsports]

Think we are talking two diffenent credits. The collection credit should be part of you tax return calculations. The credit for tax paid on a product and charged again is another.

Bought roll vinyl $100 + $7.00 tax. $7.00 expense. Sold vinyl $110. Tax $7.70 owe $.70 additional. Will usually show $110. sales and pay $7.70 in taxes again, meaning on $100. vinyl paid $14.70 in tax..OMO

i was talking about if i sold a decal for 100$ and tax was 7$, total $107.00..would the $7.00 i owe to the state be a write off or not?

 

[threeputt]

Valley, things can vary from state to state, but I'm pretty sure this is standard around the country in one form or another.

If you're purchasing anything that then gets re-sold, you simply fill out a re-sellers application and obtain a number that allows you to not pay sales tax on those items. In my state it's called a Resale Certificate.

You put it on record with your sign suppliers and they don't charge you sales tax. Flash it at Lowe's and they won't charge you either.

Might want to look into it. Makes things easier. We've never had a state audit (knock on wood) and we do use a CPA. (cuz we're not expert in those areas, and they get paid to keep constantly abreast of new legislation and tax law, etc.)

 

[cgsigns_jamie]

Ohhhhh. If I understand Fred correctly you get to deduct 2.5% of the 7%.

So for you $100 decal it would be:
Total sales = $100.00
Tax Collected = $7.00
Total Sales with Tax = $107.00
Total Due Dept of Revenue = $7.00
Dealer Discount (2.5% of $7)= $0.175
Amount Enclosed = $6.825 -> $6.83

 

[149motorsports]

You should not be paying tax on your supplies, at least not in Florida. Your suppliers should have a copy of your sales tax certificate. Otherwise the state would collect tax twice on the products you sell, I think double taxation is illegal.

Here in pa, i pay tax on my supplies,ect if i buy in the state of PA, out of state no tax (i just write the item plus tax as one total in my expense write off)...i did not fill out a tax exempt form when i started. If i wanted to use some vinyl for personal use and there was no tax paid on it, i would then have to pay 7% tax on what ever i used for personal use to the state. but since i buy most supplies in state, if i were to use them i dont have to pay the use tax.. does this make sense/and is it legal? i was told technically it is by my acountant, im just paying tax, but im getting it back at end of yr?

 

[threeputt]

i was talking about if i sold a decal for 100$ and tax was 7$, total $107.00..would the $7.00 i owe to the state be a write off or not?

Write-offs are amounts that can be charged off against gross reciepts. (gross income) Since the tax you collect is not in that column (reciepts) there is no writing it off.

You are merely acting as an agent of the state. A trustee if you will. The money is not yours, but theirs. You're holding it until you remit it to the Dept. of Revenue, or whatever it's called in your state.

I hope that's clear.

 

[cgsigns_jamie]

I have no idea how tax laws work in Pennsylvania, I have a hard enough time trying to figure out Florida's. I would trust that you CPA should know what they are doing (if not it's time for a new CPA) and they would be more familiar with your local tax laws. If it was illegal then why was your CPA doing it?

 

[149motorsports]

Write-offs are amounts that can be charged off against gross reciepts. (gross income) Since the tax you collect is not in that column (reciepts) there is no writing it off.

You are merely acting as an agent of the state. A trustee if you will. The money is not yours, but theirs. You're holding it until you remit it to the Dept. of Revenue, or whatever it's called in your state.

I hope that's clear.

yes it does, thank you!

 

[threeputt]

I stand corrected. The discount is actually 2.5%. Your accountant has either been handling that for you without you knowing it or you should refile for as far back as the Dept. of Revenue will allow. If you haven't been taking it, you might want to shop for a new accountant.

Interesting. That's a nice break, albeit not much dough. Here in gool ol' Washington state, we're offered a similar break if the taxable amount each month is under $10,000. Since ours never is, we don't get squat for doing this.

I can see the logic though. There's the same amount of paperwork to fill out each month for smaller amounts, so they try and offset that for you.

Bigger merchandisers would be happy, very happy to recieve 2.5% on sales tax they collect. Imagine the ringups at Lowe's, Safeway, etc.

That's why they don't offer it if your amounts are over 10 grand monthly.