
You are not logged in. Consider these WOODWEB Member advantages:
A personal "member history" that displays your posts at WOODWEB
Your forms at WOODWEB will be filled in automatically
Create your personal "My Favorites" page
Numerous automatic notification options
Learn more about WOODWEB Member benefits ...
Charge tax or not? -- 0 -- 
3/7

I was talking to my finisher today and somehow we got on this subject. He said they don't charge tax because they offer a service which is apparently not taxable. I however sell a manufactured product and therefore ....?
I dont have a resale license by the way. I was told it's too much trouble for a one man business.
3/7 #2: Charge tax or not? ...

Chris, your last sentence is troubling. If you are just doing this as a hobby, you are (not really) free to decide what is too much trouble.
Sales tax laws are very specific, and also vary from one state to the next. Any tax advise you get on this web site should be ignored entirely. While I don't manufacture, I'm required in my business to collect sales tax. We try to be very conscientious and compliant.
A year ago, I was subjected to a sales tax audit. Part of my customer base is represented by the types of businesses here. We didn't have all of the proper documentation for tax exempt declarations and I found out that whether I collected tax or not, I was responsible to pay that tax to the state. It cost me over $12,000 for the businesses that said they were tax exempt when they shouldn't be. Most of these we either took their word for it, or they said they would send a certificate after the sale, which they never did. With all of the states really strapped for cash, sales tax enforcement has increased in most states. If you think it's too much trouble to collect tax, imagine how much trouble it may be to come up with 6% or 8% of your last 3 years sales and send that to the government!
Please call your accountant or lawyer and get the correct advise for where you live. It's better to spend a little effort being compliant then lose everything, imho.
3/7 #3: Charge tax or not? ...

Oh, and by the way ....
I was also required to pay the sales tax on "wages" I paid to our contract cleaning lady because cleaning SERVICE is taxable - at least in Pennsylvania. So your finisher might not be the best source of tax information either.
3/7 #4: Charge tax or not? ...

Website: closetexperts.com
Steve gives very good advice. You MUST speak to a local accountant to get appropriate counsel on this issue. Preferably one experienced in your industry. I pay sales tax on materials bought locally and use tax on materials and hardware purchased out of state. Items I sell that are clearly accessories I also pay sales tax on the retail price, even though I usually include the tax in the price. But that is approved by my CPA accountant.
As Steve has mentioned the consequences can be severe.
3/7 #5: Charge tax or not? ...

In Texas my cpa tells me if it is residential and my cabinets are installed and become part of the home, no tax on labor, but yes on materials. If it is commercial, tax on labor as well. On furniture, Tax on everything. I would not suggest guessing, because it's to much trouble. lol
3/7 #6: Charge tax or not? ...

I just love how the state gets paid.
Raw materials are cut down of fabricated into sheets and otherwise.....and we are taxed for this effort.
A guy takes raw materials and turns them into a product more valuable than the raw materials.
Somebody installs the fabricated raw materials.
How many times do you suppose the same bits of fiberous material gets taxed when humans touch it?
3/7 #7: Charge tax or not? ...

Fun stuff! Let me clarify. I have to pay tax on materials (not exempt...I forget what that piece of paper is called. Thats what I meant about its too much trouble.) I'll ask my cpa...again. Im in CA now , before in NC, before that NH, before that WA. All are different I guess.
Thanks
3/7 #8: Charge tax or not? ...

Check with your state's department of revenue. In my state I pay sales tax on the materials, I build the cabinets and install them so if it's considered "real property improvement" meaning the cabinets are a permanent fixture of the business or residence and add to the property value then I do not need to charge sales tax. If it's something like a dresser or entertainment center then I do.
3/7 #9: Charge tax or not? ...

Chris,
I'm in CA and when I do my quarterly sales taxes, I break down my sales as follows: Resale (not taxable), Labor only (not taxable), installed cabinets (tax on material portion only), and final products like furniture (taxed on full amount).
Your finisher is basically correct in that roughly 100% of his service is labor. You don't charge sales tax on labor in CA.
3/7 #10: Charge tax or not? ...

My two finishers cost me about $120,000 last year, and the finish they sprayed cost more than $70,000. I question whether the entire bill you pay to the finisher goes to labor. And I second the recommendation to get advice from an accountant. Your finisher is no source for tax advice.
3/7 #11: Charge tax or not? ...

We do a fair amount of work out of state and are constantly checking sales tax rules of different states.
Tax on cost of materials is common on installed goods, tax on everything but setup is common on freestanding or items sold to end users.
Most contract laws don't let you sell and install to designers in a single contract to install as most of them aren't licensed to contract
Items that maintain their identity in a product can be bough resale and you pay the tax latter, items that lose their identity are taxable. Items that maintain their identity are things like screws, melamine top coat.
Items that lose their identity or are consumed are things like thinner, cleaners
Tax law is different by state and everyone's advice to get professional advice is the best.
A-
3/7 #12: Charge tax or not? ...

Paul,
How does this work in PA? You're finisher charges you sales tax on his materials, and then you resell your table and charge sales tax again? Isn't this what the resale exemption is to avoid?
3/7 #13: Charge tax or not? ...

The basic idea is that the State wants to tax the largest dollar, but is not able (at least as of yet) to tax the same thing at several levels in the manufacturing.
That is, they want the last seller - the retailer - to collect tax for them on the table. This then exempts you - the seller - from paying tax on the materials and labor in the table, and exempts the lumber seller and hardware seller from charging you tax, since you provide them with an exemption form.
Most states tax the finished product as a whole - no breaking down of materials (taxed) and labor(often not taxed in most states). This gets them the most dollars, if you think like a politician.
The State gets you to be their tax collector and as a result of the agreement you sign to get a retail license to sell things, you assume the responsibility of paying the gov't those taxes. Same with payroll taxes, and soon to be health insurance. This is called the freedom to start a business, and is why we fight wars overseas, to preserve this freedom, among others.
3/7 #14: Charge tax or not? ...

"The State gets you to be their tax collector and as a result of the agreement you sign to get a retail license to sell things, you assume the responsibility of paying the gov't those taxes. Same with payroll taxes, and soon to be health insurance. This is called the freedom to start a business, and is why we fight wars overseas, to preserve this freedom, among others."
Literally LOL. Funniest thing ever written by Kilgore on this board, and he's written some funny things.
"This is called the freedom to start a business" reminds me of something written by Robert Heinlein of science fiction fame, also funny in the same dry way:
Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as “bad luck.”
Back on topic, all of the advice to get professional advice on sales taxes (not to mention many other things) is right on the money. Something being "too much trouble for a one man business" is not an acceptable excuse to any sales tax authority in the country.
The really bad downside to getting it wrong is that some states can and will take what they might deem to be a willful disregard of the law and triple the amounts they determine you owe as a penalty. And they're gonna want all of the money you owe them and they're gonna want it now. What might seem to be a matter of owing 6 or 7 or 8% of a given year's sales might turn out to be 18 or 21 or 24%.
Guessing or taking advice from people who are not tax professionals is not a road you should go down.
3/8 #15: Charge tax or not? ...

My finishers are my employees, so this isn't an issue for me. The point I was making is that finishing isn't just a service - there is actual material involved, and it's not cheap. So I don't buy the "just a service" argument. But my opinion doesn't count for much compared to your state's regulatory authority.
3/8 #16: Charge tax or not? ...

@ Economic 101,
Can you rephrase you comments about
Heinlien?
I want it to be clear you are either fan of Marxism or a fan of Free Market Capitalism.
My first guess is your handle may be an oxymoron.
Our founders fought against a 3% tax.
Its time our nation does so again.
3/8 #17: Charge tax or not? ...

Website: http://www.flickr.com/photos/chaimgottesman/sets
I live in another country so much of what I say will have no bearing but...
My supplier buys raw material and pays tax on it. When I buy the material I also pay tax.
After I produce something with the material I sell it to my customer and he also pays 18% VAT on the item.
At tax time I get to deduct the tax I paid from the tax I collected and if I bought more than I sold I get a refund so it's really the end user that has paid the tax.
I assume that it works the same for you.
Chaim
3/9 #18: Charge tax or not? ...

@ Chaim,
Everything you said has bearing.
End Users are everybody's bread and butter. Without demand, where would any of us be?
In America, just over half pay no income tax. Unconstitutional entitlements are paid by the fruit of the labor of the remaining work force.
The wealthy, the movers, the shakers, the inventors, the builders, the creators, et al are demonized here as not paying their fair share but the opposite is true.
The accrual of taxation for every positive act of creation makes the purchasing of products, goods and services beyond the capacity of the very people we rely on.
Uncontrolled and unconstitutional spending by governments the world over impoverish the people they represent.
It's a proven fact, less taxation puts more money in government coffers as people spend less time trying to hang on to what they've earned.
At the end of a days labor, government demands on our creativity, our risk, our talent, our vision, our experience often exceed our ability to produce. The recent housing and financial collapse is a prime example.
I recently built a very nice shop two years ago. I'm penalized financially by our government for this effort. They seek to control, monitor and limit everything I do. If I were to build the same shop today, the cost of materials have trebled. Incomes have stayed the same.
A train wreck is coming. Out of control government spending, rules, regulation and an agenda seeking to kill our free market economy killing the foundation of our country.
I'm of the belief this is by design.
Any who profit by the fruit of their labor are preyed upon by the state.
Our fight, our right and our ability to thrive without government assistance makes us criminals as we cannot possibly comply to the letter of the law.
Chris's thread starter comment: "I was told it's too much trouble for a one man business." ... is spot on! It is to much trouble for all of us unless we are on the dole!
View higher quality, full size image (403 X 302)
3/9 #19: Charge tax or not? ...

Chuck,
You know that stack of paperwork is printed double spaced in large font and is single sided. And that woman is a 4' hobbit. She never even read the laws. Instead she dropped acid, picked up some colored chalk, and 8 hours later she looks so confused because she has no idea what she just wrote on the chalkboard.
3/9 #20: Charge tax or not? ...

My understanding ,in California ,if you do not have a CSCL you cannot legally install cabinets or fabricate on site.You therefor cannot meet the 90/10 fabrication rule ,making all your work (sales) taxable.
Below is the link with the information.
last time around
3/9 #21: Charge tax or not? ...

Website: http://www.flickr.com/photos/chaimgottesman/sets
@ chuck
I don't mind paying taxes, I understand that in order for our Governments to function they need revenue.
What I do mind however is how the government looks to our money as theirs by right and not as a grant of power from the people.
If I choose to pay taxes is it because I approve of the governments use of that money?
where is the oversight and commitment to use that tax money in an fiscally responsible manor?
There sometimes seems to be no accountability to the people.
Yes I get to vote once every four years or so but the checks and balances just keep getting overlooked at election time.
I will pay taxes but I want my hard earned money to count for more than some bureaucrats easy payday.
Chaim
4/10 #22: Charge tax or not? ...

Website: http://84lumber.com
Help,
I have been in this business many years, and have never charged sales tax on the contract value with any firm that I have been with. The problem is that I cannot find anything to support this to show to my new employer that is new to this business. does anyone know which section of the mass tax code that speaks to this? No builders will enter into an agreement with me if I am charging sales tax and my employer is mandating that I either show them the tax code or charge sales tax.
your help will be greatly appreciated!!!!
1/27 #23: Charge tax or not? ...

I will advise never take such important decisions based on forums answers! Because the consequences are too high to risk like that...Years ago, when I started my small business, I did the mistake to trust all the documentation to a friend (kind of he told me that he has enough knowledge)...well everything was fine until our first audit. They have found a small mistake related to employer taxes and we have got such a fine... I have worked 2 months to cover it. So now, all my documentation related to taxes goes through https://taxfyle.com/ . My company takes orders from many states, and as everything is different, I can not risk to work basing on the same principles with each client.
https://taxfyle.com/
0 -- 
Buy & Sell Exchanges | Forums | Galleries | Other Resources | Site Map
Buy and Sell Exchanges
Job Opportunities and Services Exchange
Employment opportunities and services within the woodworking industry
Lumber Exchange
A worldwide buy/sell exchange for lumber and wood products
Machinery Exchange
A worldwide buyer and seller exchange for woodworking machinery and equipment.
Classified Ad Exchange
Classified advertising for the woodworking industry (for advertisements that do not include machinery, lumber products and employment listings)
Forums
Adhesives Forum
Discussing topics related to adhesives within the woodworking industry
Architectural Woodworking Forum
Discussing quality standards and production of architectural wood products
Business and Management Forum
A forum for the discussion of business topics: from sales and marketing to dealing with difficult customers.
Cabinet and Millwork Installation Forum
Discussing all aspects of installation issues encountered by cabinet and millwork installers.
Cabinetmaking Forum
Discussing 32mm and face frame cabinet construction including fabrication, casegoods design, and installation.
CAD Forum
Shedding light on the all-too-often shadowy world of CAD.
CNC Forum
Discussing CNC (computer numerically controlled) woodworking equipment, software, and automated product manufacturing.
Dust Collection, Safety and Plant Operation Forum
Discussing topics related to maintaining a safe and productive working environment.
Professional Finishing Forum
Finishing issues for the production environment
Forestry Forum
The science and art of forest cultivation and timber management, planting, surveying, tree diseases, silviculture and timber harvesting
Professional Furniture Making Forum
Helping professional furniture makers improve quality, save time, and increase profits
Laminating and Solid Surfacing Forum
Issues related to laminating and solid surface materials and processes
Commercial Kiln Drying Forum
Discussions covering issues faced be commercial drying operations that process at least 750,000 bd. ft. of lumber per year
Sawing and Drying Forum
Discussing topics related to primary processing and drying of lumber
Solid Wood Machining Forum
Discussing topics related to the machining of solid wood
Value Added Wood Products Forum
Learn how to improve your output, find new markets, and boost sales of your lumber products
Veneer Forum
Discussing topics related to veneer processing, manufacturing, and fabrication
WOODnetWORK
An electronic discussion group for woodworkers throughout the world
Galleries
Project Gallery
Where professional woodworkers can post examples of their work
Sawmill Gallery
Professional primary processing companies display and describe their sawmill facilities
Shop Gallery
Professional woodworkers display and describe their shop facilities, products and equipment
Shopbuilt Equipment Gallery
Professional woodworker's jigs, rigs, and shopbuilt equipment
Other Resources
Industry News
Late-breaking news from all sectors of the wood industry
Video Library
Index of industrial woodworking related digital videos on the web
Auctions, Sales and Special Offers
Advertisers offering woodworkers discounted prices on good and services, and announcements of upcoming auctions
FORUM GUIDELINES: Please review the guidelines below before posting at WOODWEB's Interactive Message Boards (return to top)
WOODWEB is a professional industrial woodworking site. Hobbyist and homeowner woodworking questions are inappropriate.
Messages should be kept reasonably short and on topic, relating to the focus of the forum. Responses should relate to the original question.
A valid email return address must be included with each message.
Advertising is inappropriate. The only exceptions are the Classified Ads Exchange, Machinery Exchange, Lumber Exchange, and Job Opportunities and Services Exchange. When posting listings in these areas, review the posting instructions carefully.
Subject lines may be edited for length and clarity.
"Cross posting" is not permitted. Choose the best forum for your question, and post your question at one forum only.
Messages requesting private responses will be removed - Forums are designed to provide information and assistance for all of our visitors. Private response requests are appropriate at WOODWEB's Exchanges and Job Opportunities and Services.
Messages that accuse businesses or individuals of alleged negative actions or behavior are inappropriate since WOODWEB is unable to verify or substantiate the claims.
Posts with the intent of soliciting answers to surveys are not appropriate. Contact WOODWEB for more information on initiating a survey.
Excessive forum participation by an individual upsets the balance of a healthy forum atmosphere. Individuals who excessively post responses containing marginal content will be considered repeat forum abusers.
Responses that initiate or support inappropriate and off-topic discussion of general politics detract from the professional woodworking focus of WOODWEB, and will be removed.
Participants are encouraged to use their real name when posting. Intentionally using another persons name is prohibited, and posts of this nature will be removed at WOODWEB's discretion.
Comments, questions, or criticisms regarding Forum policies should be directed to WOODWEB's Systems Administrator
(return to top).
Carefully review your message before clicking on the "Send Message" button - you will not be able to revise the message once it has been sent.
You will be notified of responses to the message(s) you posted via email. Be sure to enter your email address correctly.
WOODWEB's forums are a highly regarded resource for professional woodworkers. Messages and responses that are crafted in a professional and civil manner strengthen this resource. Messages that do not reflect a professional tone reduce the value of our forums.
Messages are inappropriate when their content: is deemed libelous in nature or is based on rumor, fails to meet basic standards of decorum, contains blatant advertising or inappropriate emphasis on self promotion (return to top).
Libel: Posts which defame an individual or organization, or employ a tone which can be viewed as malicious in nature. Words, pictures, or cartoons which expose a person or organization to public hatred, shame, disgrace, or ridicule, or induce an ill opinion of a person or organization, are libelous.
Improper Decorum: Posts which are profane, inciting, disrespectful or uncivil in tone, or maliciously worded. This also includes the venting of unsubstantiated opinions. Such messages do little to illuminate a given topic, and often have the opposite effect. Constructive criticism is acceptable (return to top).
Advertising: The purpose of WOODWEB Forums is to provide answers, not an advertising venue. Companies participating in a Forum discussion should provide specific answers to posted questions. WOODWEB suggests that businesses include an appropriately crafted signature in order to identify their company. A well meaning post that seems to be on-topic but contains a product reference may do your business more harm than good in the Forum environment. Forum users may perceive your references to specific products as unsolicited advertising (spam) and consciously avoid your web site or services. A well-crafted signature is an appropriate way to advertise your services that will not offend potential customers. Signatures should be limited to 4-6 lines, and may contain information that identifies the type of business you're in, your URL and email address (return to top).
Repeated Forum Abuse:
Forum participants who repeatedly fail to follow WOODWEB's Forum Guidelines may encounter difficulty when attempting to post messages.
There are often situations when the original message asks for opinions: "What is the best widget for my type of shop?". To a certain extent, the person posting the message is responsible for including specific questions within the message. An open ended question (like the one above) invites responses that may read as sales pitches. WOODWEB suggests that companies responding to such a question provide detailed and substantive replies rather than responses that read as a one-sided product promotion. It has been WOODWEB's experience that substantive responses are held in higher regard by our readers (return to top).
The staff of WOODWEB assume no responsibility for the accuracy, content, or outcome of any posting transmitted at WOODWEB's Message Boards. Participants should undertake the use of machinery, materials and methods discussed at WOODWEB's Message Boards after considerate evaluation, and at their own risk. WOODWEB reserves the right to delete any messages it deems inappropriate. (return to top)
Forum Posting Form Guidelines
|
Your Name
|
The name you enter in this field will be the name that appears with your post or response (return to form).
|
Your Website
|
Personal or business website links must point to the author's website. Inappropriate links will be removed without notice, and at WOODWEB's sole discretion. WOODWEB reserves the right to delete any messages with links it deems inappropriate. (return to form)
|
E-Mail Address
|
Your e-mail address will not be publicly viewable. Forum participants will be able to contact you using a contact link (included with your post) that is substituted for your actual address. You must include a valid email address in this field. (return to form)
|
Subject
|
Subject may be edited for length and clarity. Subject lines should provide an indication of the content of your post. (return to form)
|
Thread Related Link and Image Guidelines
|
Thread Related Links posted at WOODWEB's Forums and Exchanges should point to locations that provide supporting information for the topic being discussed in the current message thread. The purpose of WOODWEB Forums is to provide answers, not to serve as an advertising venue. A Thread Related Link that directs visitors to an area with inappropriate content will be removed. WOODWEB reserves the right to delete any messages with links or images it deems inappropriate. (return to form)
|
Thread Related File Uploads
|
Thread Related Files posted at WOODWEB's Forums and Exchanges should provide supporting information for the topic being discussed in the current message thread. Video Files: acceptable video formats are: .MOV .AVI .WMV .MPEG .MPG .FLV .MP4 (Image Upload Tips) If you encounter any difficulty when uploading video files, E-mail WOODWEB for assistance. The purpose of WOODWEB Forums is to provide answers, not to serve as an advertising venue. A Thread Related File that contains inappropriate content will be removed, and uploaded files that are not directly related to the message thread will be removed. WOODWEB reserves the right to delete any messages with links, files, or images it deems inappropriate. (return to form)
|
|
|
|