mam98031 • Volunteer Community Member • Buyer/Seller since 1999
@coastaltechsolution wrote:If you plan on buying for resale I would highly suggest you get a resale certificate
I did in California because of the high tax
Always consult a specialized Tax person but you will want to keep records of the tax you paid and dudect on you're taxes
But again, seek professional advice
You don't need to keep track of them separately, they just become part of the cost of purchasing the products you were selling.
@coastaltechsolution wrote:
but if OP keeps records of sales tax paid for resale then that is deductible on schedule C
In what post did they say that?
When buying a $10 item that you intend to resell and you pay $1.00 for taxes on that item, then the product cost becomes $11 and that is written off on your Federal tax report. You don't break sales tax for this separately.
Now if in your Gross Receipts you are reporting the BUYER pays sales taxes, then you need to report the sales tax the buyers paid as an expense.
Important note. Ebay's 1099K does NOT include sale tax. Paypal's 1099K DOES include sales tax paid by the buyer.
@wooden_flower wrote:
If you buy on eBay for resale, you can register with eBay for tax exemption.
But you have to have a valid state RESALE CERTIFICATE.
@coastaltechsolution wrote:
That is why I recommended to keep all receipts and contact a tax specialist
One is not needed for this. The explanation was given a few times on this thread.
@aphroditeanderotes wrote:Thank you. I appreciate you taking the time and explaining that. It makes more sense now.
I'm glad I could be of help. Good luck.
@azure-calm wrote:TY.... I've been trying to confirm this and you just did. Ebay does not include. Paypal does include.
You are very welcome. But to be clear. Ebay is the only marketplace that doesn't that I'm aware of.
@femmefan1946 wrote:Sales taxes are on the sale , the service, not on the item.
So a single doohickey can be sold and resold a dozen times and be taxed every single time.
However, as a merchant, when you pay sales taxes on your purchases for resale, the tax is a business deduction.
Keep careful records of all your business-related purchases. Most of them are likely deductions from your gross selling income. And you only pay taxes on your profits after all your costs are accounted for.
I've run small businesses, for over 20 years, but I am not an accountant, or a bookkeeper or even American.
Free advice is worth every penny you pay for it.
You could just register with your state and then get a resale certificate so that you can stop paying sales taxes on items you purchase for resale or that become a part of what you sell, to include shipping supplies.
Most if not all states have generous thresholds for small businesses and unless you are selling a great deal of stuff it is not likely that you will pay a penny to your state state business taxes, but you sure can save on not having sales tax on stuff you sell.
