I am registered in my state as a business, and they send me out a "bill" quarterly for tax money that I have collected. I always put 0.00 because I would sell a hand full of birhday cakes and a few desserts here and there and didn't charge sales tax. I do however report income loss/gain to I.R.S.
now, I have moved into wedding cakes...which I sell for alot more than birthday cakes....am I required to charge sales tax? I would keep the salses tax money in a seperate account and save it for the state...but would rather not mess with it. but if kansas finds out I'm selling items for $500.00 to $1000.00 without charging tax, would I get into trouble?

I have three contracts I have to fill out tonight......so please give me some insight.
I could try to call my tax lady at H&R Block in the morning I guess, but I was hoping one of you might now something.
thank you so much!

melody

Boy Melody that's a really good question -- one I wish I had an answer to!! I'm not legal yet so all my $$ has gone to cover expenses. I'm definitely watching this post for replies!!

here is CA we have a state board of equaliztion website which can answer all your questions. Not sure if the name is the same where you live but I am sure can call the department or look up the website to find the answers you need.

I hope this helps.

If you have a tax ID number and use it to buy supplies (which they can check) then you MUST pay sales tax...unless you want to get audited, fined, and possibly jailed. You're not really paying the tax, the customer is, you are just collecting it. You should start collecting sales tax immediately!

you might want to check with your tax department. Here we do not pay tax on food unless it is hot or served in a restaurant.

So if you do not have a tax ID number and are not getting anything tax free, do you still have to collect sales tax?

The size of the sale is immaterial when it comes to collecting sales tax or not, so because it's a wedding cake coming up as opposed to a shower cake or a birthday cake shouldn't make a difference. You need to find out for sure what items are considered taxable in your state. For example in some states grocery store food is not taxable but prepared food that you bought in the grocery deli is. There can be legitimate (sp?) reasons for not collecting bona fide sales tax, such as if it is an organization that is tax-exempt, or if you are selling your item to a party who will be reselling it and collecting the sales tax on it at that time. In both of those examples, you need to have their tax ID number in your files to validate why you didnt' collect sales tax on it.

This may help answer some questions:

http://www.thinkkc.com/3_locating/3e_tax_profile/3e06_sales.htm

To set things right, you may want to look at your gross sales figure and send in the proper amount of tax for the quarter (or whatever period makes sense)--if you indeed are required to pay tax on retail food.

From this point on, you can make a point of charging it as a line item on the invoice.

Rae

duplicate post

you guys are awsome! thank you so much!!!!


I will add sales tax in my contracts...then open a savings account just for tax money collected.

thanks again!

melody

you will need to check to see what is taxable in Kansas. In Texas, the cake itself is not taxable unless you sell an individual portion, like one cupcake, but the delivery on a wedding cake or the rental fee on a cake stand is taxable. You may want to check with an accountant too, as i dont think you can hold that money or any deposit money in an interest bearing account.

sweetcakes...I'm not sure where you got the sales tax info for Texas...but cakes ARE taxable. Anything that is premade/ready to eat requires sales tax. You can call the comptrollers office in Austin and they will explain it to you. Just thought I'd let you know.

thanks, i will have to check that out. I was told that only individual portions are taxed or if its eaten on the premises. I work at a bakery and we do not add tax to any cakes.

Maybe the owner's are figuring the tax into the cost??? I own a bakery and I have to send my sales tax in monthly.

Unless the rules have changed this is posted on the TX state comptroller website. Ive only pasted and copied the first part of it.


When is food taxable?
In Texas, there is still no sales tax on purchases of dairy products, fruits and vegetables, meat, bread and most other groceries. There have been recent changes, however, affecting the taxability of other types of food products.

Bakery foods are not subject to sales tax even when sold in quantities of 5 or less unless the seller provides eating utensils. The "bakery products" category includes bread, rolls, bagels, pastries, doughnuts, cakes and pies and tortillas. Not included in the category, however, are candy, chips, small pretzels and crackers, sandwiches, tacos and pizzas. Eating utensils are such things as trays, plates, knives, forks, and spoons.

Retailers must collect tax on food (except bakery products) that consists of two or more ingredients mixed or combined on site. Retailers do not have to collect tax on food that is merely cut, repackaged, or pasteurized, or on refrigerated food that is typically cooked or reheated prior to eating. For example, a grocery store should not collect tax on sales of raw chicken breasts or fajita meat, or on refrigerated macaroni and cheese.

Pre-packaged ice cream products are not taxable if the package includes more than one item. (In the past, pre-packaged ice-cream products were only exempt from tax if the package included six or more items.) Popsicles that are not ice cream sundries are taxable regardless of how many are in the package unless they contain more than 50 percent fruit juice.