Engraving Taxes

[Russell Ludwick]

Hello Creekers,

I first want to thank the whole board for helping me out in so many ways over these past 6 months. I have bought a used laser, setup shop and have recently opened for business. I am starting to get a few calls, doing some samples and finally landed my first job.

Basically I am putting a logo on a little disk for a jewelry maker, she is sending me the disks for engraving. This is probably a dumb question I should know already but how do the engraving taxes work. I am trying to do some research, but I thought I would ask the community for some help too.

We are both in California, so do I need to charge CA sales tax or is that exempt because she is not the end user and will charge tax on her finished product? Basically, when do I charge Sales Tax? When do you charge sales tax on engraving services?

I got a resale certificate myself, when I started my company. Do resale certificates play a roll in who charges the tax?

[Bruce Clumpner]

Russell,

Congrats on your start-up! As far as taxes for california, since you are essentially part of your client's manufacturing, then you don't need to be charging your jeweler tax, but I would have her provide you with a resale certificate so you have it on file in case of an audit.

As far as other sales go, I believe that if you make any sale to an end-user, then you will need to charge tax on the materials and your time, usually as a lump sum price. Resale to stores or or other retailers does not require collecting taxes. The state will expect you to send in the taxes you collect on either a quarterly or annual basis depending on what you received when you got your resale number. The biggest thing with the Board of Equalization is GOOD RECORD KEEPING, e.g. keep track of your materials in & product out... They can really hang you out to dry if they think you are wrong on your tax reporting. Just keep it accurate. Quicken or Quick-books works just fine.

Good luck!

[Mike Null]

I think regulations vary by state. Here in MO we don't charge tax on items for resale if the reseller has a tax exempt certificate, we don't charge tax on out of state sales and we don't charge tax on services (engraving customers material). There are numerous tax exempt organizations as well but they should provide their proof if there is a question.

[Joe Pelonio]

Check with the state. Here we do not collect and pay sales tax on wholesale work, but we do have to report it and pay B & O tax.

[Richard Rumancik]

It would probably be a good idea to take a few seminars regarding finances for small businesses. Some of these may be offered for free by agencies (state, city) promoting small business. If it has to do with taxes your state government probably offers free sessions that will show you what you will need to do, how to fill out forms, etc.

[Russell Ludwick]

Thanks for the help guys. I have been doing some research and I figure contacting the CA board of equialization to find out exactly where the grey lines are is the best move. I just want to make sure i am doing everything by the books.

[Steven Wallace]

Arizona is as mentioned above for another state. Sales tax on the product but engraving is a service and is not taxed. That is unless your sales receipt does not break the two out as separate items and then both are taxed.