Retail vs Tax Exempt

I have started a business. When I started it I mostly needed it to get education for my craft. I wanted national certification in my business even though I am experienced in what I do. I know you don’t understand that. It is OK. It doesn’t pertain to the question.

How does a person go from a tax exempt shop to a retail shop? There is actually a need for my shop in my area and I am limited legally for the business people want me to do. I will have no employees. I will do the job alone,

So we need to sort out how I go fom tax exemp to retail.:smack:

Do you have a CPA? If so, he/she can take care of it all.

If not, contact your State Comptroller’s office, and they should be able to set you straight. What State are you in?

I do not have a CPA. This will be a one person business. Obviously a small business. I live in Ohio.

Tax-exempt shop? AFAIK, the only way you’re tax exempt for a business is if you’ve been declared so by the IRS, and that only applies to non-profits.

If you’ve been running the business out of your home, you’re still liable for taxes on any income you earn from it. You need to report this to the IRS (Schedule C, IIRC), and also pay Social Security taxes. You have to do the same thing on your state tax forms.

Unless there’s some sort of specific tax break for small businesses in your state (and that would only apply to state taxes), you shouldn’t be tax-exempt.

RealityChuck: I believe he’s referring to the collection of sales taxes. Generally, these are only supposed to be collected on the first sale to the consumer market. not before; so wholesalers generally do not collect sales tax, instead requiring paperwork (a retail license or a sales tax collection permit, depending on the state) before they can sell their merchandise. Canadians and EuroDopers will note that this system is quite different from a VAT.

Unfortunately, I 've never operated a wholesale business, so I have no specific experience in the legal issues of converting one to retail. Probably it’s just a matter of obtaining a permit to collect sales taxes from whatever government authority in your state issues same; however, I would urge a consultation with a lawyer in your area before proceeding, even if it turns out that there is no further complication than that.

I do not collect taxes from customers, because I am not the end of the line for the sale. For example, a phographer has me frame their work and they sell it and collect the taxes. I also can sell to tax exempt organizations. I checked this out legally. Now I would like to sell to anyone.

OK. Your terminology was confusing. You’re not tax-exempt; you’re a wholesaler, and wholesalers generally don’t have to pay sales tax. However, you are still responsible to pay income tax on all your earnings. If you haven’t been doing this, consult a lawyer; you could get in a lot of trouble if the IRS finds out you’re hiding income.

If you’re just switching from wholesale sales to retail sales, you should contact your state tax department for information on sales tax payments. It’s not a matter of getting a permit; it’s a matter of setting up an account and sending them money (and I think some states require you estimate things and pay in advance).

It appears that you will need one of these:

Regular Vendor’s License: Issued by the County Auditor to vendors with a fixed place of business in Ohio. Vendors must have a vendor’s license for each sales location.

Application Fee: $25.00 Nonrenewable

I am copying what you said. I haven’t done any business at all yet, so yes technically I am a wholesaler, but nothing has been set up yet.

I will print your information out.