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Kevin Baker
02-16-2009, 5:27 PM
Hi Everyone!

I'm still pretty new to all of this, but have hopes of making money one day with this laser. I have a JDS about 2 hours from me and purchasing from them would have advantages. However, we all know they want the Tax ID or they won't sell.

I see were I can get my Tax ID online, but since it's only me and I don't have any real income yet, is getting this Tax ID going to be a pain in the butt next year at tax time??

Thanks for the help,
Kevin

Joe Pelonio
02-16-2009, 5:42 PM
What they are looking for is a state sales tax ID. This is to sell to you wholesale, without charging sales tax, which you are responsible for collecting and sending to your state. You don't have to show a profit to keep it, just that you are making an effort to do business. That's to prevent people from avoiding sales tax by pretending to be a business when they are not. Depending on the state revenue department they will expect monthly or quarterly reports and checks from you once you get the license.

Kevin Baker
02-16-2009, 5:58 PM
Joe -

More to it than I thought... I think...

So by getting a Tax ID for my business means I have to do something with the state as well?? I live in SC.

I don't want to mess with monthly/quarterly reports if I can help it.

Thanks,
Kevin

Dave Johnson29
02-16-2009, 6:13 PM
So by getting a Tax ID for my business means I have to do something with the state as well?? I live in SC.


Ahhh, Government and reports. Hand in hand stuff. :D

In AZ they call it the Transaction Privilege Tax Number. It means you have to charge Sales Tax on what you sell in your State. Then Monthly or Annually depending on Dollars collected, you fill in a form and send them the form and the money collected for them.

I am not sure about SC, but we get reimbursed for our time in filling out the forms. :) I think I get $0.14 per form. :rolleyes: I wrote an Excel spreadsheet that formats it all so I am probably making money on the deal. ;);)

JDS use that Tax number to identify you as a real business capable of wholesale purchases as Joe says.

Scott Shepherd
02-16-2009, 8:26 PM
Yes, you really need to be doing that. How are you selling items to people now? You have to be charging tax? If not, then you're making a mistake that might come back to bite you one day. If you are charging tax, and you're not passing that back to the state, then you're asking for trouble.

Not sure about SC, but VA has a threshold for the taxes. Get to a certain dollar amount and it's monthly. Anything less is quarterly. It's simple to do if you are using something like Quickbooks for your bookkeeping. It's got the sales tax report built in.

I think there is even a free Quickbooks now. I think it's free if you have 15 customers or less or something like that. I imagine you could set up one customer as "Cash" and do a lot that way to get around the 15 customers bit if you were so inclined. Not sure, I haven't seen that version, but I did see it listed when I was looking for some info the other day.

Joe Pelonio
02-16-2009, 8:34 PM
Joe -

More to it than I thought... I think...

So by getting a Tax ID for my business means I have to do something with the state as well?? I live in SC.

I don't want to mess with monthly/quarterly reports if I can help it.

Thanks,
Kevin
The tax ID that JDS wants is state. The Federal tax ID is for reporting your business income which requires different forms than the usual personal income tax, and therefore costs more to have prepared. It also provides for collecting/reporting employee income taxes, social security and so on.
When you have a business you need to do both federal, state, and in most cases (city) licenses, paperwork and taxes.

Mike Null
02-16-2009, 9:28 PM
It's really not much trouble. I was on an annual report then a couple of years ago went to quarterly. It takes about 10 minutes; 5 or less if you use something like Quickbooks.

In most states you don't collect on service, tax exempt organizations, re-sellers and out of state sales.

If you are marking a part for a business who then assembles and sells the product it his job to collect the tax.

Kevin Baker
02-17-2009, 5:04 AM
WOW.. Thanks everyone for the help... glad I asked... at first it sounded like a nightmare, but maybe not so bad after all.

Let me recap here:

Get a Federal Tax ID.
Get a SC State License (and maybe a city license)
When I sell things, collect the SC Tax (send monthly or quarterly.. will investigate)
At tax time, I have to any my business taxes as well as my personal taxes

Okay... another question.. I have a lady at my church who owns her own beauty salon... could I just use her Tax ID to purchase from JDS? Or a better question would be... does JDS report their sales to anyone based off their Tax ID. What would be the danagers of using the Beauty Shop Tax ID?

Thanks again for all the help..
Kevin

Mike Null
02-17-2009, 7:24 AM
The fed tax ID is not really necessary if you're going to combine your incomes from the business and your other income. You can just use your SS number. If you want a fed tax id you can get it on line.

Anthony Scira
02-17-2009, 10:08 AM
Its really not bad. And you know you won't have any trouble in the future.

I think I sent my last check for like 65 bucks. What can I say I am still learning and its a SMALL business.

Dave Johnson29
02-17-2009, 10:49 AM
Get a Federal Tax ID.
Get a SC State License (and maybe a city license)


Kevin,

If you sell stuff in a City then you will need the Fed EIN (Emlpoyer Identification Number) a State Sales Tax license and a City Business license. If you sell outside a City then you will need the EIN plus State plus a County Business license.

Here in AZ, depending on the City you sell from, the State collects for most Cities but some Cities make you collect directly for them. That gets a little messier as you have to keep track of the amounts for State and City.

I think our State Sales Tax here is 8.3%. Of that the City gets 2.3% and State gets 6%. Fortunately for me, this City allows the State to collect so I only have one form (and check) per period to fill out. Also if you ship to an in-State address, the shipping is not Taxable so you need to keep that seperate when invoicing.

For the Feds, you should also consider a Corporation. Then have it assigned as an "S-Corp" by the IRS and this will transfer the income directly to your personal Tax instead of paying Company Taxes on the Corp income.

Talk to an accountant as I am not all that clear on the inner workings. I bought out a friend's S-Corp but it is not that difficult or costly to set one up if you do it all yourself. Well in AZ, that is. :) YMMV.

Stephen Beckham
02-17-2009, 11:00 AM
Kevin,

When I started I got a Federal ID number then realized I had to send a report quarterly whether I had employees or not - so I cancelled it and haven't had to use it since. Like Mike said, I used my SSN.

Turbo Tax for business is strong enough to handly your normal income combined with extra income from a hobby business. It allows you to write off business expenses and other business related income seperate than your regular income.

On the question of using the Beautyshop's id - it won't be a problem with JDS... What will become a problem is now it shows as income against her business and not yours. IF - you report your State sales tax through her and pay them through her business. Someone will have to claim the income from the sales and someone will have to pay taxes on that income.

Remember - JDS will not report their sales to anyone, but when stock is purchased against a tax id, there is an expected resale of that stock - then the sales tax collected at the time of retail sale. If you are not planning on retailing the stock, here in Kentucky, you have to pay a USE Tax on it meaning you're not selling it, your using it - either way, they are going to get their 6% on that stock coming into their state.

Bottom line - you should get your state sales tax license. You will save the possibility of audits and everything else for your friend and yourself by just having open books versus trying to slip and slide or simply trying to make life simple without having to apply....

Mike Chance in Iowa
02-17-2009, 4:26 PM
While I don't want this to come off sounding negative, if you purchased your laser to sell items and earn an income, that is running a business. If you want to purchase items at wholesale cost, so that you may engrave and sell those items for profit, that is running a business. Running a legitimate business requires a business license and/or Tax ID and whatever other documents necessary in each city/county/state. Depending upon your business income generated and your county/state rules, you may need to file monthly, quarterly or yearly. If you didn't earn anything that year, you still have to file, but indicate you didn't earn anything.

While we all want to save on costs and make as much money as possible without paying taxes :D you need to ask yourself if you really want to present yourself to suppliers (& customers) as a business based on false records. Do you really want to jeopardize your friend's business reputation by using her data?

Kevin Baker
02-17-2009, 6:39 PM
All ~

I'm still amazed at the amout of information this forum has and I'm glad to be a part of it all. Thank you all for your input and pointing me in the right direction.

Looks like I need to grab my local business owner and get educated on getting this up and running.

Again, thanks everyone..

Kevin

Dan Hintz
02-17-2009, 7:21 PM
You may not need an EIN (federal), but you will certainly require a local/state business license and tax certificate if you sell anything.

If you answer yes to any of the following questions, you also need an EIN:
Do you have employees?
Do you operate your business as a corporation or a partnership?
Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms?
Do you withhold taxes on income, other than wages, paid to a non-resident alien?
Do you have a Keogh plan?
Are you involved with any of the following types of organizations?


Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
Estates
Real estate mortgage investment conduits
Non-profit organizations
Farmers' cooperatives
Plan administrators


If you should need one, you can have one instantly created for you online, just go to:
https://sa1.www4.irs.gov/modiein/individual/javascript-disabled.jsp
After you've filled out the online form, your new number is shown on the screen and emailed to you. No waiting in line, no waiting 2 months for forms, etc.

I'll also add that even if you do not require an EIN (e.g., if you are a sole proprietorship), you may find it handy to get one anyway. For example, some public governmental forms require you to identify your company with a tax ID... you can use your social security number as a link to the business, but it's probably safer to use an EIN.

Mike Chance in Iowa
02-17-2009, 8:26 PM
Use the link below.

http://www.scbos.com/default.htm

As the web site indicates "... is the official state web portal for anyone with a business or starting a business in South Carolina who needs to file permits, licenses, registrations, or taxes with the state. From the convenience of your computer at anytime, 24 hours a day 7 days a week, you can take care of your important state filings, and pay for multiple filings and/or taxes with one credit, debit, or EFW payment."

Bill Cunningham
02-17-2009, 10:35 PM
Just for comparison, In Canada, if your sales exceed 35k 'i think' you need a GST (fed salestax) number, if your are selling retail in Ontario (probably all the other provinces as well (except Alberta) you will need a Ontario sales tax number. IF you are shipping out of Ontario, you need only charge the fed 5% tax (unless you have a branch in the Prov. you are shipping to) Most of my work goes out of the Province or to the U.S. so I have to do a quarterly fed report, and a 6mo Prov. report, I get back any GST I spend for the business, and the PST # allows me to buy PST Exempt (8%) but I get to pocket 5% of the PST 8% I collect from customers.. On the other hand if you put those two taxes together, you get GST/PST, sounded out, it's the attitude of everyone about taxes..:D