Hammermechanicman
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I setup a tax free account at o'riley with no problem. Guys there are pretty cool and don't mind helping me.
Here's something I had to happen to me today.
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I got business there but they have lost my tax exemption. Having to refile. Just haven't been back in town yet as most errands are done when I go to the bank.
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bertsmobile1
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Again that is where the USA has made a mess of things by trying to protect the wealth of the upper end ,
We went to a broad based GST 22 years ago so every one pays it regardless of weather you are retailing, wholesaling or end user .
Registered business can pass the tax on to the end user and claim a credit for the GST they paid so in total the government should never get any more than the 10% of the final price, thus I pay the 10% on everything I buy locally , everything I buy on a credit card and everything bought through Amazon or Ebay but not on what ever I buy from foreign retailers.
Big business has to do a tax balance ( called a BAS ) monthly & small businesses quarterly and if you run a very small business you can opt out all together & just wear the tax which makes running a single person business very easy & allows me to be very competative price wise although I am right on the border line of being forced to opt in.
IT is about to go to 12% or 15 % shortly it is just a matter of time .
Compared to the old sales tax system, it is a whole lot better as there is just 1 rate and not the phone book of different rates we used to have and the similar phone book of exemptions .
We went to a broad based GST 22 years ago so every one pays it regardless of weather you are retailing, wholesaling or end user .
Registered business can pass the tax on to the end user and claim a credit for the GST they paid so in total the government should never get any more than the 10% of the final price, thus I pay the 10% on everything I buy locally , everything I buy on a credit card and everything bought through Amazon or Ebay but not on what ever I buy from foreign retailers.
Big business has to do a tax balance ( called a BAS ) monthly & small businesses quarterly and if you run a very small business you can opt out all together & just wear the tax which makes running a single person business very easy & allows me to be very competative price wise although I am right on the border line of being forced to opt in.
IT is about to go to 12% or 15 % shortly it is just a matter of time .
Compared to the old sales tax system, it is a whole lot better as there is just 1 rate and not the phone book of different rates we used to have and the similar phone book of exemptions .
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Here I don't get to deduct the sale taxes paid so the customer is paying it along sale tax again on the new balance as it is part of my base cost plus my markup. IE the customer gets stab twice for taxes.
Example: Part costs $100 plus 9.5% tax = $109.50 . Then I GPM it @ 30%. That is $168.46 plus 9.5% = $184.46. When if I don't pay the tax it is $153.85 plus 9.5% = $168.47. This is assuming a 35% markup.
Example: Part costs $100 plus 9.5% tax = $109.50 . Then I GPM it @ 30%. That is $168.46 plus 9.5% = $184.46. When if I don't pay the tax it is $153.85 plus 9.5% = $168.47. This is assuming a 35% markup.
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Hammermechanicman
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Are you showing sales tax as income? I don't think i follow you. My accountant has me show parts and labor i charge out as income i then add the 7.5% sales tax that is not included as income. If i paid sales tax on a part i do not include that in what i charge tax on to the customer. I don't pay retail sales tax twice on a part but the tax i paid is passed on to the customer as part of the parts cost.
bertsmobile1
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As comparred to $100 part +$10 GST = $110 on my shelf
GST get passed through so with the mark up it is $ 135 + $ 13.50 GST so they pay $ 148.50
At the end of the month I claim the $ 10 I paid against the # 13.50 the customer paid so I give the tax man $ 3.50
This killed off all of the retailers who used to start a new business every year, pay no tax because they had an exemption , charge the customer tax then go into voluntary liquidation a day before the end of the financial year so the government got no tax at all .
And because it is done monthly or quarterly you don't end up with a massive tax bill and no money left to pay it with ,
It is so much simplier particularly for the wholesalers as they do not have to keep records of all their customers tax numbers
Big stink when it was introduced but ask any genuine business now days and they will all tell you it is so much easier than the old days
It also means that when Mr money bags gets his company to buy $ 50,000 worth of booze for a personal party, he can not avoid paying the tax on it which was the norm before the GST was introduced .
And it is actually cheaper
We used to pay 35% luxury goods tax on motorcycle clothing provided to our riders ( boots, jackets gloves & helmets ) + 15 % sales tax
This dropped to a flat 10% after the GST
Motorcycle couriers used to be able to buy motorcycles tax exempt if they were a business, then write them off at the end of the year & sell them for less than retail at a good profit.
Similar story with cars & vans
In its first year the tax take actually went up by over 20% which shows just how many were rorting the system.
I would imagine the same would be happening in the USA
You could safely bet that all of the booze drunk by politicans was tax exempt because it was for "business use " & corperate catering .
GST get passed through so with the mark up it is $ 135 + $ 13.50 GST so they pay $ 148.50
At the end of the month I claim the $ 10 I paid against the # 13.50 the customer paid so I give the tax man $ 3.50
This killed off all of the retailers who used to start a new business every year, pay no tax because they had an exemption , charge the customer tax then go into voluntary liquidation a day before the end of the financial year so the government got no tax at all .
And because it is done monthly or quarterly you don't end up with a massive tax bill and no money left to pay it with ,
It is so much simplier particularly for the wholesalers as they do not have to keep records of all their customers tax numbers
Big stink when it was introduced but ask any genuine business now days and they will all tell you it is so much easier than the old days
It also means that when Mr money bags gets his company to buy $ 50,000 worth of booze for a personal party, he can not avoid paying the tax on it which was the norm before the GST was introduced .
And it is actually cheaper
We used to pay 35% luxury goods tax on motorcycle clothing provided to our riders ( boots, jackets gloves & helmets ) + 15 % sales tax
This dropped to a flat 10% after the GST
Motorcycle couriers used to be able to buy motorcycles tax exempt if they were a business, then write them off at the end of the year & sell them for less than retail at a good profit.
Similar story with cars & vans
In its first year the tax take actually went up by over 20% which shows just how many were rorting the system.
I would imagine the same would be happening in the USA
You could safely bet that all of the booze drunk by politicans was tax exempt because it was for "business use " & corperate catering .
Hammermechanicman
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Bert, you have no idea how FUBAR tax rates are in the US. Each county in each state sets their own rate. In the county i live in has a fine arts sales tax added in to support theaters in the county as an exemple
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Here it depends what of sales we do as when we paid the sales tax into the government bodies. Currently I paid the collected sales taxes quarterly. In Tennessee we don't a discount on the first $100 of the tax collect but when I was in Alabama I got to keep up to $10 or 10% of the first $100 as a collector's fee.
Now it would be nice to able to deduct the sales taxes I pay on local purchases but those are usually small purchases as I normally go through my distributors that have my sale tax exemption on file. The tax man actually get more as updated retail prices are current and not the lower retail price a few months ago. It just at the end of the year when I pay my income tax on the higher profit margin after my normal business related deductions.
Now as you noted Bert there will always be someone gaming the system to keep from paying their fair share. And this is just not fair to us that do pay our fair share because we have to pay more than would be needed to if just everyone did pay fairly.
Yes Hammer we do have multiple tax rates to deal with depending what is involved. And you can't forget the cities that adds their on tax on top what the others do. I am lucky business wise as what I sell and labor is all taxed the same except for on-site labor being sales tax exempt but I rarely do onsite repairs. When I was Alabama if I sold items and delivery outside my normal place of business every county and city has to paid their rate. And that was a major in the back side.
Now I am hoping to receive some good news from Rotary as I applied for an account with them today. Just like to cut some of the middlemen when I buy their products. When I talked to my local rep for them it sounds like it will be good for my customers, my business, and Rotary. Definitely will make my business more competitive with the local shops.
Now it would be nice to able to deduct the sales taxes I pay on local purchases but those are usually small purchases as I normally go through my distributors that have my sale tax exemption on file. The tax man actually get more as updated retail prices are current and not the lower retail price a few months ago. It just at the end of the year when I pay my income tax on the higher profit margin after my normal business related deductions.
Now as you noted Bert there will always be someone gaming the system to keep from paying their fair share. And this is just not fair to us that do pay our fair share because we have to pay more than would be needed to if just everyone did pay fairly.
Yes Hammer we do have multiple tax rates to deal with depending what is involved. And you can't forget the cities that adds their on tax on top what the others do. I am lucky business wise as what I sell and labor is all taxed the same except for on-site labor being sales tax exempt but I rarely do onsite repairs. When I was Alabama if I sold items and delivery outside my normal place of business every county and city has to paid their rate. And that was a major in the back side.
Now I am hoping to receive some good news from Rotary as I applied for an account with them today. Just like to cut some of the middlemen when I buy their products. When I talked to my local rep for them it sounds like it will be good for my customers, my business, and Rotary. Definitely will make my business more competitive with the local shops.
bertsmobile1
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Ours was just as bad till some really greedy moron made a constitutional challenge to state based fuel tax .
So faced with loosing a major source of income the states all agreed to a system where the Feds levy the tax & they all get a cut
Mind you we only had to get agreement from 8 governments not 50 .
States still levee taxes, but not sales tax apart from stamp duty which is payable on every contract that has to be registered like buying a house.
Local government taxes land to cover the costs of local roads, waste collection & all those town hall type things
I always have a laugh at the idiot morons who compare our income tax to yours then complain we are taxed too much when in reality we are ranked around 4th in the low tax regimes world wide particulalry as there is neither death duties nor inherientance tax ( which their should be ) .
And yes we do get a lot of very wealthy people from the USA & the UK immigrating down here so they can die tax free .
Although the UK post Brexit will now tax inherientances on all UK citizens regardless of where the deceased resided .
Apparently Spains biggest source of foreign exchange is UK citizens , moving there then becoming Spanish citizens so they can avoid the UK death tax by setting up funds for their children with Spanish Banks \
Eventually the entire planet will wake up and shift to turnover tax for businesses and flat rate income tax for people and the effective rates will be the same
Plus of course the Tobin tax of 0.001 % on all foreign currency exchanges that would alleviate world poverty in less than a decade as all those obscenely wealth people / funds that extract money by playing the Forex market will finally pay tax on their massive profits .