Okay, this may be a silly question, but I keep having this issue with customers. They seem to think they don't have to pay tax on my items. They call for a quote on a birthday cake, etc. and I tell them that type of cake runs $xx.xx. Then they seem amazed that I have to tack on tax!

Do you include the cost of taxes in your price or add it on afterward? For example, if you say that cake is a $50.00 cake, are your taxes included in that price? I mean, everywhere we shop taxes are added in after the fact, isn't that how I should be doing it?

Kathi

Each state is different. People are easily confused.

In my state, there is no sales tax on groceries so periodically people think a wedding cake is considered "food". Once in a blue moon I have to explain that it's taxable, just like McDonald's french fries.

Whenever I quote an event, the quote shows the 6% sales tax and the 2% Food & Beverage tax that I have to charge, so they know from the quote stage it's taxable.

Or, you can go with my stand-by explanation: People are idiots!

Check with your state's taxing authority to see if cakes and baked goods are subject to sales tax. In Texas they are not (woo! ). If you do have to collect sales tax, I would not include it in the price, I would charge $50.00 + the amount of the tax.

Here it is 6.75% sales tax. I add that to each order. It then gets reported each quarter. They pay sales tax on cakes bought at the grocery stores or warehouse clubs.

Kathi -- I actually have had the same problem. One day when an annoying customer picked up a cake one of the other girls was in the shop and I was not there. She insisted that I never told her tax would be added on and refused to pay it. The girl was so dumbfounded that she didn't know what to do!!

Since then, I always say ____ plus tax.

Crazy people!!!

Oh, and it's not just food items! Hubby works at a dealership and when people come in to get their car fixed, they get all P.O'd that sales tax is added! Some of them hold up their oil change coupon that shows it's "ONLY" $29.95.

PLUS TAX YA BIG DUMB JERK!!!!!!!!!!!

They try to not pay it. Hubby would tell them they don't get their car until the bill is paid.

Momof4luvscakes are you in Wake County? I spent two hours on the phone with the State Tax Office and then Wake County's Tax office and they said we have to collect 7.75%!! They said Wake County has an extra tax on "prepared foods" of 1% over the 6.75%.

If this isn't true could you explain it to me? Unfortunately, previously I had been told that I only had to collect the 2% tax, so I'm in the hole because I have to pay the taxes even though someone at the tax office told me the wrong rate!

Anyway, from now on I'm going to make sure I quote $xx.xx + tax!

Thanks,
Kathi

Here is Ireland all taxable items have the tax already included in the total price displayed. Foods which are considered an essential item, like bread and milk are tax free, but cake is a 'luxury' item and therefore subject to tax at 13.5% (and that is the lower rate! Standard VAT is 21%! )

I've been doing some research on this, as I am registering my business in the next few weeks (just trying to figure out a name!) and I was very suprised to find that I would have to charge VAT on my cakes (in the UK, where I'm from, cakes are tax free). So, if I charge 90 for a cake, I have to add 13.5% and charge my customer 102! That's quite a price hike! If i add it to my calculations which are based on expenses and time plus profit, the price shoots up (and my cakes are already pretty pricey as I specialise in carved cakes and modelled figures, which require a lot of time to make), or do I absorb the cost and eat into my - very small - profit, as I'm just starting out and don't want to scare away customers by being too expensive.

Kelly

I talked to my accountant when I first started. She said each state is different. But here in Ohio there is some law that if you are operating out of your home with one oven, then you don't have to charge taxes. Something like that. Now if I get a dual oven or move to shop, then that changes.

Thank goodness I don't have to deal with taxes either.

Erdica, there is a PDF document here ( http://tax.ohio.gov/divisions/sales_and_use/index.stm ) that shows that food consumed off premises is not taxable, while if you had a bakery and had tables and chairs, then that food is taxable.

http://tax.ohio.gov/divisions/sales_and_use/documents/streamlined_sales_tax_food_BR.pdf

Makes me thankful I live in a tax-free state (NH).

I remember always being confused about tax when I lived in Wake Cty, NC. In 5 years I never did quite get it figured out.

I agree with you missmeg! I love tax-free New Hampshire! with that said, I have no experience with taxing food but it is somewhat confusing when I'm in Mass and I pay more than I'm expecting for someting...point being I think it would just be easier and alot less confusing to just ADD the tax before you give a price!

When I lived in NC (after living in a food-tax-free state my whole life), I'd go grocery shopping and automatically add $10 to my calc while shopping. That way I was never surprised at the checkout.

I so prefer NOT havin to pay/charge tax though.

Where in NH are you? I'm in Newmarket, and Jeanne has actually already been to my house for a cake play date this past summer .

I run two businesses (mine and DHs) that do sales in two states, and what's even worse, both businesses carry items that are taxable in one state but not taxable in the other, and what's even worse is that my tax items are taxable in my home state but not the neighboring state, but my DH's tax items are nontaxable here but taxable there...agh!

When people say, "What?!? Sales tax?!?" I laugh a little laugh that sounds like, "Heh. What planet are YOU from?" and say, "Yes, according to the State Department of Revenue, sales tax applies to anything on the invoice." (also if you charge delivery fees, look into that, because our delivery fees are taxable in our neighboring state, not just the merchandise--THAT's fun to explain, too.)


I always WANT to say: "Would you go to Home Depot and insist that you don't like the sales tax charge, and try not to pay it? Or offer to pay in cash (ooh! shh!) and maybe they could just leave the sales tax off?" Yep. I'm sure ANY cashier would go for that!

ijits

Missmeg I'm in Derry, I plan on going to the first NH Cake Club meeting...See you there?!!?

Thank the good Lord Oregon's a no tax state!

You don't charge sales tax, the government does! You are just required by law to collect it.

Not only do I Have to charge state tax, but I also have to charge a county food and beverage tax of 1%! I was nervous people would ask about that, but I guess taxes are just so high in our state people are used to it. I have it posted everywhere though, that prices do not include tax.

Tax where I am located is 9%. Think your scared to tell about the tax...

Why is the cake being taxed?!!
Cause I have to pay the tax and I'm sure you're a nice person, but I didn't budget paying for your purchases this month.

Okay, maybe not so mean.

Say simply that you pay taxes cause I have to turn them over to the state or they'll come after me.

I didn't pass the laws, I just follow them

mommachris

Today I HAD TO PAY Arkansas $50 to send in the application to collect sales tax. Wha.....?
Oh, and it's 9.6%.
It's paid monthly and since I have been open since July I have late fees and interest to pay on the taxes I have already collected.

But I do know that is in my own fault for finding and getting this form in as soon as I opened.