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SALES TAX AND FOOD PRODUCTS

© Barbara Massie

In the previous article, a point was made about marking items that were not selling as "On Sale." Read Holiday Shopping: Is a Sale Price Your Best Deal? This is from the consumer side of the fence, but such material usually gives hints that can be helpful to you, the seller.

SALES TAX AND PRICING

There are two ways you can charge sales tax to the customer.

One is the standard way, take the percentage of the tax in the area and add it to the price of the product.

 e.g. $2.00 times .08 sales tax = .16 tax  = $2.16 total price

The second way? Many of the public feel that they shouldn't have to pay sales tax "extra" at a craft show. So to please them and to keep from dealing with pennies, you can work the sales tax into the price of the item. To keep the price at even cents you might have to add a few cents or subtract a few cents, but at the bottom line your money will even out.

To include sales tax in your item, you have to do some up front figuring. First, you must know the sales tax charged in the area of the show. You can request Sales Tax Charts from the Controller's Office for all counties. Learn more about your State Sales Tax.

Then as an example you could charge $2.00 for the item in the example above. Then on a $3.00 item with tax of .24, you could charge $3.25. Eventually you would recoup most of the money.

When you balance your money that evening, you have the total of money made during the day. That total includes your product price and the tax (on the above examples) at .08%. To figure how much tax you collected you must remember that you actually collected 100% of the product price plus .08% for the tax.

So the total you made during the day is 108%. Divide the total made by 108, then multiply by 100 - this is your total product sales. What is left should be .08%, the amount of your sales tax collected.

You must pay the sales tax you collect to the State. If your sales are high as a sole proprietor or if you have a partnership, you will be required to file and pay the sales tax quarterly, otherwise you will file once a year.

As you collect the tax, put it into a Sales Tax Payable account. This is on paper, but also set the money aside so when the notice comes to pay, you have the money. This is the State's money, not the business'