# Charging tax for soap??



## JN

Good evening! Up to now I have sold soap here and there and to those I know like friends and family. I have done a couple of events this month and would really like to get involved with some farmer's markets. I'm wondering if I am supposed to charge tax on my soap?? How do you all deal with the tax thing?? Up to this point I have been writing off my soap making expenses along with other farm expense and including my sales as part of my farm profit/income. ?


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## [email protected]

You are *suppose* to collect and pay in state sales tax. I don't think most at Farmer's Markets do. I know at ours that I've never seen anyone charge sales tax. I do 'tax included'. I do a large flea market and have soaps/lotions in stores where I have to charge/pay tax, so I just lump it all together. Customers LOVE my 'tax included', I LOVE my 'tax included', my accountant... not so much. LOL But she doesn't buy my soap.


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## JN

So at tax time at the end of the year you pay tax on your sales or what?? I'm pretty clueless here. lol


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## [email protected]

I'm pretty clueless about it too.  I just did what my accountant told me to. LOL She even did the form online to get my tax id #. Maybe someone else here can explain the details better. ??


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## fmg

We have a tax ID number through the state. We were getting monthy or maybe bi-monthly forms to fill out, but Idaho has an online payment form. I think the hubs switched to quarterly, so states might have different options. I don't know, he takes care of that part pretty much, but I think it's pretty easy to just apply for your tax number and make the payments. At the farmer's market I go to (I don't make soap, but sell milk and cheese), I think we had to give them a copy of the tax id permit thingy and at each market we calculate taxes owed at the end of market, and then the fee for market comes off the pre-tax amount, we get charged a percent of sales for the booth.


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## hsmomof4

Yes, you are supposed to charge, and then pay to the state, sales tax on the sales of your soap. In some states, there is no sales tax on food, for example, but I don't know of any states where there is no sales tax on items like soap. You can contact your state department of revenue for the exact details of how it works in your state. The rules depend somewhat on what state you are in, but generally, depending on the volume of sales that you ordinarily do, you might file sales tax only annually, or as frequently as monthly. For the state that I am in, with my level of sales, I file and pay sales tax quarterly, and it's pretty easy to do, as you can do it online and it comes right out of your bank account. That's probably not an option with every state (paying online) but I'm betting it is possible for most. At the farmer's market that I do, you have to provide your state tax ID number to even participate and display your state retail certificate at your table. Some states allow you to charge a price with the tax included and some require you to charge tax separately. Your best bet is going to be to look up information on your state department of revenue and go from there. Ours has everything online, but there are also numbers to call if you have questions. Here's a link for sales tax info for Texas: http://www.window.state.tx.us/taxinfo/sales/ and this is the link for applying for your sales tax permit: http://www.window.state.tx.us/taxpermit/


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## eam

:yeahthat

At our markets there are sometimes state tax people who wander around checking to be sure that people have their tax id and 'sales and use' permits. We also have to have the tax id to participate in markets.


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## JN

Thanks everyone. I guess I have some homework to do. Thanks for all the input.


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## MF-Alpines

In Indiana, you need a REGISTERED RETAIL MERCHANT CERTIFICATE. Sales tax is paid online only, directly to the Indiana DOR.

According to www.bizfilings.com, State law does not allow you to pay the tax out of your pocket - known as "absorbing the tax." The Indiana DOR website does not state whether or not it is allowed, but I think I asked a few years ago and it does not. Not 100% sure, though.

I am registered with the state, collect the sales tax, and pay the state.


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## swgoats

I have the tax ID, and pay the tax online. I'm like Denise - tax is included. I deal in bills only. I know why the accountant hates it. Because if the bar is $3, how much of that is the tax? But if you look at this chart -
http://www.in.gov/dor/files/st-107.pdf

My $3 bar is really $2.80 plus $0.20 tax. (These are guest size soaps - 2.25-2.5 oz.)


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## JN

Thanks everyone.


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## [email protected]

Yup. The first time I told my accountant, she was like: "You do WHAT? ... how in the world???" I had to tell her how to figure it. <rolleyes> It's rather easy. You take your total sales and divide by 107 (7% tax). Then you take the resulting number and times by 7. That's your tax. Then you subtract your tax from your original amount and that is your *taxable sales*. Easy.


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## swgoats

Ok, now you're just showing off  lol


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## MF-Alpines

[email protected] said:


> Yup. The first time I told my accountant, she was like: "You do WHAT? ... how in the world???" I had to tell her how to figure it. <rolleyes> It's rather easy. You take your total sales and divide by 107 (7% tax). Then you take the resulting number and times by 7. That's your tax. Then you subtract your tax from your original amount and that is your *taxable sales*. Easy.


You mean multiply by .07? For instance, $5 divided by 107% = $4.67. $4.67 would be your sales. You could either subtract that from $5 to get $0.33 or you could multiply by .07 to get $0.33.


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## [email protected]

Well, that works too.  You simply did it with % instead of whole numbers. When my accountant and I do it, it's with my total *taxable* sales for the year. So I figure for every $107 sold, $7 of that is what was collected for tax. So if we go with $23,456 / 107 = 219.21 X 7 = $1534.50(tax). $23,456(total sales) - $1534.50(sales tax) = $21,921.50(taxable sales).


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## [email protected]

HA! I just tried yours. It's easier. 

ETA: You want to be my new accountant?


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## MF-Alpines

[email protected] said:


> HA! I just tried yours. It's easier.
> 
> ETA: You want to be my new accountant?


LOL. No, thanks.


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## [email protected]

I wouldn't either. *~* LOL


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## fmg

At our farmer's market they have on the slip for paying booth fee how to figure out your tax, since they charge the fee pre-tax. What they do is (our sales tax is 6%):

total sales divided by 1.06. Subtract that number from your total sales to figure out your tax owed.


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