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Here, in NJ, state sales tax is paid by the final consumer. That means that if you are a jewelry manufacturer, you get to buy your gold, silver, diamonds, and gems tax free and you charge the sales tax during the retail sale. I assume most states are the same.
Here, the exception to this rule is any business that does work on real property, contractors, landscapers, etc. I pay sales tax on the 2×4’s I buy and I am supposed to only charge sales tax to my customers on the labor portion of my bill. The sales tax has already been paid on the materials.
If The bill is not broken down to separate materials and labor, the entire bill is taxable. I’ve been doing this because 1) I don’t want to have to keep track of every 2×4, especially when the true cost of materials can’t be known until after the job is complete, and 2) I’m not sharing my profit figures with my customers.
The problem with my system is that I’m collecting taxes for my lovely state twice and I don’t want to give them any more money than I have to.
Any suggestions? What happens in the rest of the country?
Replies
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Here, in NJ, state sales tax is paid by the final consumer. That means that if you are a jewelry manufacturer, you get to buy your gold, silver, diamonds, and gems tax free and you charge the sales tax during the retail sale. I assume most states are the same.
Here, the exception to this rule is any business that does work on real property, contractors, landscapers, etc. I pay sales tax on the 2x4's I buy and I am supposed to only charge sales tax to my customers on the labor portion of my bill. The sales tax has already been paid on the materials.
If The bill is not broken down to separate materials and labor, the entire bill is taxable. I've been doing this because 1) I don't want to have to keep track of every 2x4, especially when the true cost of materials can't be known until after the job is complete, and 2) I'm not sharing my profit figures with my customers.
The problem with my system is that I'm collecting taxes for my lovely state twice and I don't want to give them any more money than I have to.
Any suggestions? What happens in the rest of the country?