What to do with the taxes you charge on merchandise
In any business where you sell some type of product, you have to deal with charging taxes on merchandise. But what do you do with those taxes?Do you have to pay them right away or can you save the money in a bank account until tax season?And then when tax season rolls around, how do you know what to pay?Can you just send a check to the IRS or do you have to fill out some type of form? If you have any or all of these questions, you're in luck.Keep reading and learn all about merchandise taxes.
First of all, if you are in a business where you plan to sell some merchandise, you will need to register for a sales tax number. This is required in order to meet state tax law requirements.It is possible that your state either does not charge a sales tax or does not charge a sales tax on the product you sell. To determine if your state charges a sales tax, all you have to is go shopping in your state!If you are charged a sales tax at the register, then your states does indeed charge a sales tax. Generally, if your state charges a sales tax then you will need to register for a sales tax number.Without this number it will not be legal for you to sell merchandise to the public as a form of business.
To obtain a sales tax number, you must do the following.On the internet, log on to your state's web site. Search the site for information on sales tax permits.You should be able to do a simple "search" for the information you need, but if you are having difficulty, you may be able to call or email for help and general instructions. If you are able to find the correct information on the website, download and print out all the documents you need.Fill out the forms and then register for a sales tax permit and number. You may also be required to submit some form of processing fee in order to get your permit and number.
You may also be required to register for a local sales tax permit.To find out if this applies to you, you will need to contact your local government offices. Today, most local governments also have web pages where you can search for information.If your community does not have a website, simply call and ask whether you need a local sales tax permit, how to register for a permit, how much it costs, and what type of reports must be filed with the local government.
Once your business is ready and legal to charge sales tax, the next big question is "What do I do with my tax on merchandise?" Obviously, you must pay your state (and possibly local government, if it is required) the sales tax you have collected on your merchandise.Many businesses pay this tax quarterly, as it makes it much easier to keep track of (and is much easier for the accountants!). Some businesses opt to save their sales tax money in a bank account until it is due, while others just pay it out of their regular accounts every 3 months.
Another thing to be aware of is that you may have the option of claiming your sales tax as a tax deduction.According to www.irs.gov, if you file a Form 1040, you have the option of claiming either state and local income taxes or state and local sales taxes. If you have remembered to save your receipts throughout the year, you should add up the total amount of sales taxes you actually paid and then claim that amount. If you did not save all your receipts, you still have the option of claiming state and local sales taxes.The IRS website (www.irs.gov) has many tools, including a sales deduction calculator, to help you determine your taxes.