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Discussion Starter #1
ok i am doing a project that involves heat transfers and some screen printing as well. Now my question is, she is supplying the shirts and i am just printing them. I do not have a resale permit, and neither does she. Should i collect tax? I know you dont charge tax on clothing in NJ, but its more a printing service, right?

Even if i supply the shirts and print on them for someone i should be collecting tax right??

Also is there a rule of thumb for a percent to leave out of each transaction to pay my state, and income tax when that time comes?
 

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If you are making shirts that she will sell and she doesn't have a resale certificate you should collect taxes if you don't want to break the law. You can't control what she does.

Anytime you sell shirts to a consumer, you should collect taxes.

I don't understand you last question? Are you asking what to set aside for state and federal income tax payments? You set aside the bracket you are in and pay per the tax law. Consult an accountant. In most jurisdictions it's probably quarterly, but I'm not an accountant.
 

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ok cool, i just started up, can you tell me what tax form i would be using so i can do some research?
 

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ok cool, i just started up, can you tell me what tax form i would be using so i can do some research?
Are you operating under a business name? Did you register your business with the county recorders office? Do you have the cart before the horse?

You can't collect sales tax unless you are operating a business and have a resale permit.
 

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Here in AZ we do it like this... your mileage may vaty state to state.

You need to get a company set up in your state (dba,soleprop,llc, etc) then apply to the IRS for an EIN number (federal tax id... your business's social security #). Once all that is done you can take your EIN & corp info into your state department of revenue (the sales tax folks) and get a state tax id#. THEN you may have to register with your county and/or city.

Your local tax authority has documents and classes so you can learn what is taxable and what isnt and what the reporting requirements are.

We collect tax with each sale, and file a corp tax return monthly and pay the taxes at that time.

You need to get LOCAL advice, from an attorney, accountant, or seasoned local business weenie about the ins and outs of your state. Google is your friend. Try searching for "Arizona State Sales Tax ID Requirements" but substitute your state.
 

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Some states require you to collect tax on products and services; some states require you to collect tax only on products. You have to find out what NJ requires.
 

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Here's how it works in TX.

You can file a DBA with the county, no questions asked. If you're doing something that might require sales tax, you have to file with the comptroller's office for a tax ID. You do not need a Federal EIN number unless you have employees. The TX Comptroller's website has good info on what is ans is not taxable in TX. For example, when I create a website for someone, I have to charge them tax; but if I stand behind them and tell them what to click, I do not.
In TX, regardless of where you get the materials, you are "manufacturing" a product - taking something and making it into something that is suitable for retail sale - therefore you have to charge sales tax or your customer needs a tax resale number.
I would recommend that you contact your local Small Business Development Center - a branch of the federal Small Business Administration (SBA.org - Small Business Loans and more..). They are usually affiliated with a university close to you. They have people on staff that help to start small businesses, going through all the steps from idea to business plan to paperwork to funding to accounting. Their services are free, and they often can help you find funding and get training before you get too deep in the hole starting a business. Given your example, if you were in TX, either you or your customer (or both) need a tax ID. I have no experience in states that don't charge tax on clothing, but I would bet that they're referring to "ready-to-retail" clothing. You are supplng a product to a customer that intends to retail, you need to check with your equivalent of the Texas State Comptroller.

Note: Sorry for the typos, my computer won't allow me to gofix them without deleting everything in front, so you'll have to live with it...

Regardless of what you are told or anything you hear from anyone, you need to keep detailed records regarding when/why you did or did not charge sales tax. Even if your state is lenient, the IRS is not. Whenever you think the local, state, or federal government may be involved; you need records - good ones, cover-your-*** records. When it comes to "the man" you can never have enough documentation.

As an aside, usually when you file with the state for a tax ID, you pick your own industry code. Be aware that certain codes (NAICS or SIC) trigger oversight of other laws. If you pick say, a code for printing, you're going to trigger a state or federal environmental law. Do your research and pick the appropriate code. Don't half-*** it and pick something convenient because you might get a visit from the EPA later. If you get an EIN and you don't actually have any employees, you're opening yourself up to inspection by OSHA and the Labor Board.
 
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