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Hi all,
I have a few questions regarding sales tax for the state of California...I did find this good information from Mystysue on another thread...
"If i print shirts for someone (or make anything that i sell them).. If they are gonna resell i do not have to charge tax if they have a tax resale number.. If they dont have that number.. I still have to charge tax.
If im selling to someone for promotions and they are not reselling .. but giving away.. I should charge tax.."
What do you do about promotional items, samples, give aways, or donations?
For example...
1)I buy some shirts according to what some of my future clients are looking for. I do the labor for free and they pay the cost of the material, equipment use(electricity, depreciation), etc for a few samples. In return, I gain the experience, portfolio addition, and hopefully a customer. I don't tell them the piece price of each item, but just give them a "discounted" rate for the samples(which is actually just the cost of the materials, etc). No money is actually made on the pieces.
-The question is, since these are samples for the customer, do I charge sales tax on the items(even at cost)?...From reading mystysue's comment above, since it's not for resale, I wouldn't charge tax.
2)If I made some shirts for a church or event of some kind and am donating the shirts and they are not for sale, should I have paid tax on the shirts when I bought them since they will never be sold?
Since I'm new at this I'll be doing some testing with materials, experimenting, samples, giveaways, etc and I'm wondering what will happen when my supplier files their taxes and the state sees that I bought shirts and paid no tax, and have no sales tax coming in. This shouldn't happen for a long time, but it may be a few months before I earn peoples trust, build up my skills, and choose the right materials that work for me. There will also be losses on shirt that are messed up, etc, so not everything I buy will sell. Once I actually start selling shirts, then I'll have some taxes to turn in, but for now, is it ok what I'm doing?
Thanks again for all your help!
I have a few questions regarding sales tax for the state of California...I did find this good information from Mystysue on another thread...
"If i print shirts for someone (or make anything that i sell them).. If they are gonna resell i do not have to charge tax if they have a tax resale number.. If they dont have that number.. I still have to charge tax.
If im selling to someone for promotions and they are not reselling .. but giving away.. I should charge tax.."
What do you do about promotional items, samples, give aways, or donations?
For example...
1)I buy some shirts according to what some of my future clients are looking for. I do the labor for free and they pay the cost of the material, equipment use(electricity, depreciation), etc for a few samples. In return, I gain the experience, portfolio addition, and hopefully a customer. I don't tell them the piece price of each item, but just give them a "discounted" rate for the samples(which is actually just the cost of the materials, etc). No money is actually made on the pieces.
-The question is, since these are samples for the customer, do I charge sales tax on the items(even at cost)?...From reading mystysue's comment above, since it's not for resale, I wouldn't charge tax.
2)If I made some shirts for a church or event of some kind and am donating the shirts and they are not for sale, should I have paid tax on the shirts when I bought them since they will never be sold?
Since I'm new at this I'll be doing some testing with materials, experimenting, samples, giveaways, etc and I'm wondering what will happen when my supplier files their taxes and the state sees that I bought shirts and paid no tax, and have no sales tax coming in. This shouldn't happen for a long time, but it may be a few months before I earn peoples trust, build up my skills, and choose the right materials that work for me. There will also be losses on shirt that are messed up, etc, so not everything I buy will sell. Once I actually start selling shirts, then I'll have some taxes to turn in, but for now, is it ok what I'm doing?
Thanks again for all your help!
