Sales Tax Exempt

[Vikuna]

I'm a Premium Member but I thought everyone should know this. I read through the Premium Skype chat and Bob mentioned that in New York state, selling ads are sales tax exempt. I honestly don't know the state requirements in the State of California where I am so I would have to check. I recommend you do the same for your state or country. Selling ads in places where you are required to charge sales tax, or as it is called in some other places, value added tax, could be a complete financial disaster for you.

So, find out for yourself, better safe than sorry and happy selling!

Eva

[Bob Ross]

Really good topic Eva. Let's hope most states are similar.

[jrobconsult]

I think in Texas you pay the sales tax. I am waiting clarification from the state.

[Oogyboogawa]

I think in Texas you pay the sales tax. I am waiting clarification from the state.
This quote from their site may or may not be helpful:


Who is required to hold a Texas sales and use tax permit?
You must obtain a Texas sales and use tax permit if you are engaged in business in Texas and you:

sell tangible personal property in Texas;
lease tangible personal property in Texas; or
sell taxable services in Texas.

Please see Rule 3.286 and publication 96-259 Taxable Services for more information.
The requirement to obtain a Texas sales and use tax permit applies to individuals as well as corporations, firms, partnerships, and all other legal entities.


Here is the link to the list of "Taxable Services" : http://www.cpa.state.tx.us/taxinfo/taxpubs/tx96_259.html

It may fall under "taxable labor" - not sure... something I need to find out too. I always thought sales tax was just on tangible goods sold, and we're not really selling the postcards themselves. But I may have been wrong in that understanding.

[timpears]

sell tangible personal property in Texas;
lease tangible personal property in Texas; or
sell taxable services in Texas.

Please see Rule 3.286 and publication 96-259 Taxable Services for more information.
The requirement to obtain a Texas sales and use tax permit applies to individuals as well as corporations, firms, partnerships, and all other legal entities.


Here is the link to the list of "Taxable Services" : http://www.cpa.state.tx.us/taxinfo/taxpubs/tx96_259.html

It may fall under "taxable labor" - not sure... something I need to find out too. I always thought sales tax was just on tangible goods sold, and we're not really selling the postcards themselves. But I may have been wrong in that understanding.

This is not a tangible product you are selling, and you are selling the final product, not the labor that goes into producing the ad and mailing it. I am not a lawyer, but if I lived in Texas, I would not be charging sales tax to my clients. But don't take this as legal advice.

[prosperwithdnb]

I also live in Houston Texas, since you are not selling the post cards to businesses you do not need to collect taxes. I called the comptroller and confirmed this. This would fall under consulting services

[jrobconsult]

I also live in Houston Texas, since you are not selling the post cards to businesses you do not need to collect taxes. I called the comptroller and confirmed this. This would fall under consulting services

Thanks.........I emailed them, but was going to call friday if I did not hear anything.

[prosperwithdnb]

What part of texas you from jrobconsult, would like to share ideas on what you have done and templates or anything you have

[jrobconsult]

What part of texas you from jrobconsult, would like to share ideas on what you have done and templates or anything you have

San Antonio........am in the process of hiring people to start next week but not having much luck, so I probably will do the first card myself. I have a template for the ad layout ( I have 14 ads).

[prosperwithdnb]

would you mind sharing with me the template that would be cool, take a look at my process so far and sales tip in my thread i posted a detail on selling and i have pictures its pretty cool. If you could send that would be great if not i understand. Good luck with everything if you would like talk since where not to far away on the phone and share ideas that would be great. I come to san antonio once in a while my friend lives there he owns a hotel off rittiman and 35 so i get to stay free when i come by. Good luck buddy

[jrobconsult]

would you mind sharing with me the template that would be cool, take a look at my process so far and sales tip in my thread i posted a detail on selling and i have pictures its pretty cool. If you could send that would be great if not i understand. Good luck with everything if you would like talk since where not to far away on the phone and share ideas that would be great. I come to san antonio once in a while my friend lives there he owns a hotel off rittiman and 35 so i get to stay free when i come by. Good luck buddy

I am not able tom PM on here. You can PM me on the Warrior Forum with the same name.

[sixthflag]

For those in Texas who are planning to tie this in with an online effort, you will need to make sure you understand completely whether or not the online part is taxable. Hostgator is currently located in several cities in Texas, and a little over a year or so ago they got quite a shock (!!!) in the form of a tax bill for north of $500,000 from the Texas tax authorities! And that tax was only due on the business services they provide to Texas residents. Of course, this was because they did not know taxes were due and the state authorities hit them up most likely for several years' worth, but just the same, it's a MAJOR OUCH when they come a-knocking! And they DO eventually audit local businesses, as that is how Hostgator got caught.

[BobRossIsMyHero]

I'm a Premium Member but I thought everyone should know this. I read through the Premium Skype chat and Bob mentioned that in New York state, selling ads are sales tax exempt. I honestly don't know the state requirements in the State of California where I am so I would have to check. I recommend you do the same for your state or country. Selling ads in places where you are required to charge sales tax, or as it is called in some other places, value added tax, could be a complete financial disaster for you.

So, find out for yourself, better safe than sorry and happy selling!

Eva

Thank you so much for this topic because that was the exact question on my mind.... :o Okay, so when you said it could spell a complete financial disaster...do you mean potential ad buyers would now not do business because of any taxation or would we as a business would be adversely affected having to deal with a tax issue?

[teledude]

I had a similar question and a quick trip to my states website (Iowa) reveals - Advertising is EXEMPT!

great news!

I used to have a little guitar shop and I hated filing those quarterly sales tax reports (and sending in the money)

[sydsho]

I also live in Houston Texas, since you are not selling the post cards to businesses you do not need to collect taxes. I called the comptroller and confirmed this. This would fall under consulting services

Great. I called the comptroller weeks ago and they said I had to collect sales tax!

[DoranPeck]

I also live in Houston Texas, since you are not selling the post cards to businesses you do not need to collect taxes. I called the comptroller and confirmed this. This would fall under consulting services

Great. I called the comptroller weeks ago and they said I had to collect sales tax!

In Texas I believe you have to charge sales tax on the graphic creation of an ad itself, but not on the sale of the Ad. space in/on a publication.

[billyme]

So, I re-read the New Jersey rules because I remember sales tax being required for direct mail >.>. I now read them again because I am about to start the business. What kind of financial disaster can you get into for not taking it? I don't want to put myself that far into the business yet, nor do I have any idea how to incorporate it.. I suppose I will have to factor it into the price though. Even though, then, that cuts revenue by 7-9%, and profits by maybe 20-30% (since I'd prefer to include it in the price, not have clients deal with it). Arrgh, this makes it quite more complicated.

Dave

[Pierre!]

Glad you brought this up. Still researching the City of Tucson 'New Law' that was signed in December 2011
New Tucson Amended Tax Code 12/13/11 (http://www.tucsonaz.gov/sirepub/cache/2/jmmt0245mtndwz55fkkeomqf/409853104032012061932745.PDF%20url)

It does look like Phoenix DOES have a Tax on direct mail:
Phoenix Tax On Advertising (http://phoenix.gov/webcms/groups/internet/@inter/@dept/@fin/@plt/documents/web_content/d_037804.pdfurl)

I may be glad I am down in Tucson....

Patrick

[pspro]

Hello gang, my first post as I'm just getting my business set up. I'm thinking I'll have to call the CT Dept of Revenue to confirm but from looking a this on the state webpage:


Connecticut's sales tax exemption for cooperative direct mail advertising applies to Val-Pak and similar mailings that involve sending coupons or advertisements from many different businesses to potential customers in a single envelope

it appears that our postcard advertising would be tax exempt... any Connecticut mailers in here?

Heidi

[KatieC]

Im from new jersey and I was wondering how i would pay taxes on the income I will hopefully be making this summer since it will be "self-employed"

if anyone could answer this for me it would help me out bunches :)

[localmobileads-ssg]

Im from new jersey and I was wondering how i would pay taxes on the income I will hopefully be making this summer since it will be "self-employed"

if anyone could answer this for me it would help me out bunches :)

Katie, you will need to speak to a CPA, he is qualified to advise you and also to tell you exactly what you need to do, i know that self employment is considered a 1099 form, but there arent too many benefits or advantages in doing it that way, if you plan to scale this into earning more than $10K this summer, ( all it takes is 2 cards lol ) then you will for sure end up owing money to the IRS, so do your diligence, as i doubt any of us here can advise you properly unless they are CPA and certifiable hehehe ;)

Consider opening a Corporation later on, if you plan to earn bigger $$$ throughout the year, it allows you to pay yourself a "salary" and deduct expenses, like gas, part of your lease on a car or financing of a car, supplies, even working from home, part of your living space can be deducted as business use, etc etc.

from what i know figure 25% of what you earn plus 7.5% that goes to Medicare, is considered straight across the board deductible, so 30% of what you make, set it aside, to be safe for now
( again i am NOT A CPA, please do your diligence, and i am only sharing knowledge on what i know personally ) :)

good luck

[Vikuna]

When I wrote this thread way back in December 2011, all I was considering was sales tax on the 9x12 postcard. Since then, most of us have bought the other wso's from bob and now we are also dealing with direct mail campaigns, graphic design and selling variable print materials to businesses. That said, you are going to have to pay sales tax in one form or another and as a rule (this is just my layman advice), set aside 30% for taxes. Better yet, consult with a CPA for more precise directions... What's even better than a CPA is an EA, which stands for "enrolled agent". That is a CPA that has taken advanced training from the IRS and knows everything even better. What "could" be a gray matter for a CPA is crystal clear for an EA. Google can help you find one,

Eva

[KatieC]

haha well in a few years you guys can consult with me :) im an accounting major (havent learned any of this stuff yet though)

[Vikuna]

haha well in a few years you guys can consult with me :) im an accounting major (havent learned any of this stuff yet though)

Katie, seriously, do look into becoming an EA asap. That way, you can position yourself as being an expert and superseed every CPA in town,

Eva

[KatieC]

Im not to sure what I wanna do yet, to be a CPA i need an extra year of schooling (i plan on getting my masters anyway which is 2 years) but to be an ea i think i need like somewhere around 70 extra credits which would be like 2 1/2 extra years, so like a semester added onto getting my masters..so it would probably work out that way, as long as I pass all my testing :)

[Bob Ross]

BORING!

[KatieC]

haha you may think so, but i've actually enjoyed my accounting classes so far :)

[Bob Ross]

Obviously yes talk to an accountant.

I'm not an accountant and can't give you any tax advice but I'll tell you what applies to me that I make sure of...

1.) If I sell a tangible product like biz cards/stationery/flyers/etc. then I have to charge the client sales tax on the product but I do not have to charge tax on the design of it.

2.) If the client isn't taking possession of the product than I don't have to tax it, like mailings for example.

3.) Save every receipt that's even remotely business related because you'll need all the deductions you can get.

4.) At some point, forming an LLC or an "S" corporation will be a smart move since it may allow you greater tax advantages as well as the fact that your business liabilities won't affect your personal liability.


as far as your initial question, as a sole proprietor, you are your business so you should be taxed at the personal tax rate.

[Vikuna]

Im not to sure what I wanna do yet, to be a CPA i need an extra year of schooling (i plan on getting my masters anyway which is 2 years) but to be an ea i think i need like somewhere around 70 extra credits which would be like 2 1/2 extra years, so like a semester added onto getting my masters..so it would probably work out that way, as long as I pass all my testing :)


Use math to see if its worth it, i.e. with an EA you would make x/yr versus without x/yr...

Eva

[jrobconsult]

I also live in Houston Texas, since you are not selling the post cards to businesses you do not need to collect taxes. I called the comptroller and confirmed this. This would fall under consulting services

Great. I called the comptroller weeks ago and they said I had to collect sales tax!

I called the state again and after 20 minutes of holding, the comptroller's office told me it was taxable. I am charging tax. It is better safe than sorry. Texas is aggressive in collecting sales tax.

[ayman01]

Okay, so I've been online searching to see if Ohio is a taxable state and I can't seem to find any info.

Where does one go to find this out?

[Bob Ross]

http://bobrossoffline.com/forum/showthread.php?1204-PDF-Direct-Mail-Tax-Liability-for-50-States&highlight=sales+state

make sure to hit thanks for mister natural's post on the link above

[ymherbst]

OK - so this got me really concerned that another layer of complexity will be added to the postcard sales process - i.e., filing whatever sales tax forms would be required by the State of Virginia and collecting and reporting and filing taxes collected for each postcard completed .. but I think this document confirms that we do not have to charge, collect, or file sales taxes on the post cards in the State of Virginia .. is that how others here interpret this document?
http://www.tax.virginia.gov/Documents/FIELDAUDITGUIDELINES.pdf

See page 4 - exempt sales