Sales Tax....Can my whole business be a service?

I’m currently doing my sales tax form for the state of Wisconsin.

In Wisconsin services do not need to be taxed, an example would be a hair cut, computer repair, car repair, etc. From my understanding any business that you are paying for the skill of the worker, rather than an actual product.

(I believe with car repairs, any parts would be taxed, but not the service)

Anyway, my question was, can i claim my entire business as a service?

A little background of what i do with this one business i own: I buy closeouts, damages, close-dated, and out-dated products.

**Particularly on the damaged product, the packaging either needs to be repaired or replaced. ** --------- Would this be considered a service? Seeing as if my company didn’t take this product in, it would either go to a landfill, or a pig farm.

Not trying to cheat Uncle Sam out of his share, but times are tight, and i am seeing if i can squeeze a few extra dollars.

You don’t say what you do with the products after you buy them and repair/replace the packaging. If you then sell them, they are to be taxed like any other tangible product. What might or might not happen to an item if you didn’t acquire it is totally irrelevant.

Very simple — you sell a tangible item that can be held and possessed, it’s taxable.

You “buy closeouts, damages, close-dated, and out-dated products.”

I presume at some point you sell them, possibly after fixing them up.

You are selling a product. Period.

Don’t try to fiddle the taxes.

I thought products bought for resale were exempt from sales tax; that only the consumer pays sales tax.

Who are you selling these things too? If you’re selling them to consumers, the consumers are paying sales tax (assuming they are taxable items) and you turn the tax over the the government. If you are selling them to other business and they are reselling them or are tax exempt, they’ll collect the tax and you don’t have to worry about it. However, it’s very important that you collect a Tax Exemption Certificate from them and keep it on file. Make sure they provide you with their Seller’s permit number when they do that.

Having said that, like BrotherCadfael said, if you’re just buying stuff that’s about to expire and reselling it, collect the tax and pay it like you’re supposed to. The government isn’t stupid and you’ll be out of business within a year if you try to play games like that. Opening a new business is hard enough as is, adding tax fraud to the list of things you have to deal with isn’t going to make it any easier.

You don’t save anything by not collecting sales tax.

You are supposed to collect the tax from retail customers and remit it to the state, but it’s never your money; you are just an agent of the state.

If you collect from customers and fail to remit it, then essentially you’ve stolen the state’s money, and they get uptight about that. (If you didn’t bother to collect it in the first place, they’ll still be upset, but again you didn’t save any of your money.)

On top of that, it’s essentially a mini loan. You get to use ‘the state’s’ money for anywhere from 20-60 days depending on when you collect it and when you have to pay it.

I do think it’s a sort of funny when people (customers) yell at me for charging them tax on something and tell me that I’m ripping them off. Over the years there’s been a handful of times where I’ve had to say “you do realize that I don’t keep this money, right, I collect it and then I turn it over to the state, it’s not like I’m just making more money on things I add sales tax too” and they really, truly, didn’t know this.

Ignoring my feelings on sales tax and politics, I’d love to not have to charge sales tax, it’s just one giant headache for me. I have to train my cashiers on what’s taxable, I have to track it with my accounting software, I have to pay it every month, it’s one more thing that I can be audited over, it’s another thing that customers see on their receipt and complain about (what’s this $1.17, I didn’t buy anything for $1.17). But, alas, it’s part of running a business.

Not remitting sales taxes, payroll taxes, income taxes is probably the #1 reason why many small businesses ultimately go bankrupt.

Actually, one would save money if they did not have to collect and submit sales tax to the state. There are significant admistrative costs in collection, acciunting and remitting the money. States often let the business keep a portion of te tax to help offset these costs, but generally not nearly enough. It is, though, a cost of doing business. Avoiding doing so will almost always end up costing much more in the long run.

That being said, mrdeals is not selling the service of rewrapping goods, he is selling the goods he rewrapped (apparently to consumers). Collect and remit sales tax as prescribed by law.

Never, ever cheat the tax man.