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Discussion Starter #1
Are unlicensed landscapers (gardeners) in CA allowed to resell items without a reseller's permit? And usually nurseries will give a discount to professionals, are we allowed to not pass on the discount to our customers?
 

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Franchise Tax Board, CSLB & IRS are likely going to want to chat with you...:whistling

If your buying it tax exempt you need to charge tax & report it.

If your buying it & paying tax & re-selling items at profit you still need to charge tax and report to FTB.
 

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I'm a Mac
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This is a perfect example of why you normally would invoice the customers for both materials and labor, one price, no breakdown. The minute your invoice shows a value for materials and a separate value for labor your are opening up a can of worms
 

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Discussion Starter #4
This is a perfect example of why you normally would invoice the customers for both materials and labor, one price, no breakdown. The minute your invoice shows a value for materials and a separate value for labor your are opening up a can of worms
So this raises a few more questions.

1) If you get audited, don't they look at your bank statement also to see that you aren't buying materials for jobs?

2) Do you have to have a separate bank account for your business, even if you are just a sole proprietor doing business as?

3) Don't they reward you for buying materials, ie: write-offs? I did my 2013 taxes (on turbotax) and almost finished without entering any of the stuff I purchased for customers, I owed back over $1000. I went in and entered my write-offs and actually got a few hundred back at the end, instead of owing. Mostly from fed and some from state. Am I missing something?
 

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Discussion Starter #5
If your buying it & paying tax & re-selling items at profit you still need to charge tax and report to FTB.
So if I'm buying something, not tax exempt, then I am paying taxes at the time of purchase. But then since I'm reselling for a profit, say 20%, how do I report this and pay this tax? Is this something you do when you file your taxes or is there some other special procedure?
 

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So this raises a few more questions.

1) If you get audited, don't they look at your bank statement also to see that you aren't buying materials for jobs?

2) Do you have to have a separate bank account for your business, even if you are just a sole proprietor doing business as?

3) Don't they reward you for buying materials, ie: write-offs? I did my 2013 taxes (on turbotax) and almost finished without entering any of the stuff I purchased for customers, I owed back over $1000. I went in and entered my write-offs and actually got a few hundred back at the end, instead of owing. Mostly from fed and some from state. Am I missing something?
Good gosh.
You are not "rewarded" for buying materials. It is considered a cost of doing business. How you could complete your tax return without your write offs is beyond my comprehension.
 

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Discussion Starter #7
Good gosh.
You are not "rewarded" for buying materials. It is considered a cost of doing business. How you could complete your tax return without your write offs is beyond my comprehension.

Well as I said, I did include my write-offs and I was rewarded, over $1000. So why wouldn't anyone include that stuff in an invoice? Otherwise you get taxed on it as though it were labor! Again, am I missing something?
 

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Well as I said, I did include my write-offs and I was rewarded, over $1000. So why wouldn't anyone include that stuff in an invoice? Otherwise you get taxed on it as though it were labor! Again, am I missing something?
Where did you include these items on your tax return?

Is there a new line that says REWARDS?
 

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So if I'm buying something, not tax exempt, then I am paying taxes at the time of purchase. But then since I'm reselling for a profit, say 20%, how do I report this and pay this tax? Is this something you do when you file your taxes or is there some other special procedure?
In either case, you need to be a registered business in your state, with a tax ID. Normally you would purchase materials tax exempt (since you are a reseller), sell them with your markup and collect sales tax on the entire price.

Details vary from state to state, but you would most likely be required to send those sales tax monies in at least quarterly.
 

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Discussion Starter #11
Where did you include these items on your tax return?

Is there a new line that says REWARDS?
Line 4: Cost of goods sold.

I'm just saying I WAS rewarded, rather than taxed for these purchases that were resold. Semantics. But my question remains unanswered:
Why would anyone suggest not including materials on customer invoices, since in the end I end up getting money back instead of paying the government? Was this because of the resell license? I'm looking at you Chris Johnson.
 

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Line 4: Cost of goods sold.

I'm just saying I WAS rewarded, rather than taxed for these purchases that were resold. Semantics. But my question remains unanswered:
Why would anyone suggest not including materials on customer invoices, since in the end I end up getting money back instead of paying the government? Was this because of the resell license? I'm looking at you Chris Johnson.
Just because it's not line item'd on the invoice doesn't mean you don't get to deduct it.

You need to fix your terminology so it's better understood what you're talking about.
 

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Discussion Starter #13
Those weren't writeoffs; they were Cost of Goods Sold. That gets subtracted from the income you're paying taxes on.
Correct, it was costs of goods sold. But I still made more profit than the amount of the goods sold, so when they were subtracted by turbotax I would have still had a net gain, and been taxed on them. I'm just wondering why I got a refund.
 

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Correct, it was costs of goods sold. But I still made more profit than the amount of the goods sold, so when they were subtracted by turbotax I would have still had a net gain, and been taxed on them. I'm just wondering why I got a refund.
You got a refund because the COGS reduced your declared income enough to do so.

However, if you never paid state sales tax on your markup amount, you still owe that to the state. Turbotax doesn't specifically ask you about that little detail, because it's a separate issue from your yearly income taxes.
 

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The Dude
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In either case, you need to be a registered business in your state, with a tax ID. Normally you would purchase materials tax exempt (since you are a reseller), sell them with your markup and collect sales tax on the entire price.

Details vary from state to state, but you would most likely be required to send those sales tax monies in at least quarterly.
Tin, in the state of TN contractors are considered end users of the materials and we don't get the sales tax ID instead paying sales tax to our suppliers - doesn't matter if we mark up materials or not. Per Chris though, separating in invoices could open up a can of worms.
 

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Tin, in the state of TN contractors are considered end users of the materials and we don't get the sales tax ID instead paying sales tax to our suppliers - doesn't matter if we mark up materials or not.
Are you not required to collect and submit sales tax on the markup portion of materials billed for? Hard to picture the gummint missing that one.
 

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In NY we are not collecting sales tax if it a capital improvement so instead of markup the smart ones use only cost of goods and the markup is reported at least by me as markup on labor which is not taxed.

Complicated isn't it?
 

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Are you not required to collect and submit sales tax on the markup portion of materials billed for? Hard to picture the gummint missing that one.
If that's the case I'l move to TN
 

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jwatts said:
So this raises a few more questions. 1) If you get audited, don't they look at your bank statement also to see that you aren't buying materials for jobs? 2) Do you have to have a separate bank account for your business, even if you are just a sole proprietor doing business as? 3) Don't they reward you for buying materials, ie: write-offs? I did my 2013 taxes (on turbotax) and almost finished without entering any of the stuff I purchased for customers, I owed back over $1000. I went in and entered my write-offs and actually got a few hundred back at the end, instead of owing. Mostly from fed and some from state. Am I missing something?
Your missing an accountant doing your books and taxes

Profit is not a dirty word

Real easy way to explain this is

You invoice a customer $1000.00, that's all the customer needs to know, job cost them $1000.00 including all materials and labor

Your cost that you see is a breakdown of many many items to charge the customer $1000.00, it's not a simple black and white $500 materials $500 labor

You have expenses your not even thinking about, things like insurance, phone, gas, wear and tear, advertising, and this list goes on and on, and a portion or percentage of all this comes from your $1000 job.

The other reason you are not charging your customer a sales tax is you purchased the materials, you are the end user or buyer, because you are using them to make an improvement to their property and supply a finished installed product, you are not reselling the item to your customer.

Yes it can be complicated, but once you understand it, it all makes sense
 

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Are you not required to collect and submit sales tax on the markup portion of materials billed for? Hard to picture the gummint missing that one.
Same here in IL. The one decent thing about doing business here.
 
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