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 » From: California Dear TaxMama: I will be doing business based out of california where the tax on purchases is 8.25%. If I sell random products that cost me a total of $499, what am I entitled to owe [in taxes] to the government? In other words, is the tax collected based on the amount I paid to purchase the merchandise sold ($41.17 is 8.25% of $499) or is it based on what I sell the products individually? Or will the outcome be the same, more, or less? Also, if I want to sell something priced "tax included" what is the formula/calculation to do so? Any and all advice would be great ... thank you Chris Dear Chris, Sales taxes are charged on the sales price, if you're selling merchandise. So, if you buy things for $499 and sell them for $600, the sales tax is $49.50 ($600 x 8.25%). Now, if you're buying things for your business (like office equipment, printing of brochures, etc.) out of state and not paying sales tax on it, then, yes, you would pay 'use tax' on the purchase price. At 8.25%. Yes, Chris, they have you coming and going. You'll find lots more information about sales taxes here. For more details on the calculation of sales taxes that are included in the price, please read this explanation in last week's issue of Ask TaxMama It's lots of fun. You'll love it. And I promise, you'll make mistakes. Everyone does. Best wishes, Eva Rosenberg Your TaxMama  |
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