You remember last week I took you through the process along with my sister as she set up her small antique/collectibles business. She has:
- Chosen a business type - limited liability company
- Considered the issues of liability and insurance
- Completed the startup paperwork, and
- Obtained local licenses and permits.
But there are two more legal/permit issues she needs to check on before she opens her business. I'll review the first one - State Sales Tax - today.
State Sales Tax
Before she begins selling anything, she must check to see if she needs to get a state sales tax permit. If she must charge sales tax, she needs to set up a process for adding sales tax to each item sold, keeping track of sales tax deducted, paying the tax to the state as directed, and filing statements showing how much as been sold. It is a lot of paperwork, as you can see, but each state makes sure you comply. She must also find out the sales tax rate for the locality (city or county) where her goods are being sold, because these rates vary throughout each state. It's a very confusing process! I just created a "How To" that might help you with setting up sales tax processes. You should still check on the website of your state department of revenue for details.
Luckily, my sister found out that the antique mall collects and pays the sales tax on the items that are sold by vendors in the mall. It's worth paying a fee to the mall to do this for her. She just needs to be certain that they are indeed handling this, so she isn't liable for unpaid sales tax.