Sales Tax, and the bottom line

[mdlbear]

With sales taxes due at the end of the month, and a week of travel impending, it's a Good Thing that I was finally able to get started. I was able to get the data-entry for pre-orders done by starting with my shipping-label address list and editing in the somewhat smaller number of entries from my paper list. Sales to dealers, and non-preorder sales, were easy enough to add up by hand.

I have yet to break down sales by location for sales tax purposes, but that's all I have left to do this weekend. The bottom line is 390 albums out the door, and a gross take for the year of 4665. 80 out of the total were contributor, promotional, and gift copies -- anyone out there know how I treat those for tax purposes? There were a total of 195 pre-orders, meaning that there are 61 signed, numbered pre-order packages still available. All-in-all I've definitely made a profit on the project, so I'm a happy filkish bear at the moment. I may have to leave off some related expenses in order to convince the IRS that I've made a profit, but that's a problem for another day.

Comments

[singlemaltsilk.livejournal.com]

My understanding, based on my own business and my contributions on others' CDs, is that contributor and promotional copies are considered business expenses, and thus not subject to sales tax. Gift copies, OTOH, would be items drawn from your business for personal use, and thus subject to certain taxes, including sales.

But I would definitely seek feedback from the experienced likes of billroper, bedlamhouse, cadhla, filkertom and tollers.

[mdlbear]

That would be my guess as well. I also have to pay "use tax" on items mail-ordered from out of state. Which, now that you mention it, is something I haven't done yet. Urk!

[aerowolf.livejournal.com]

Wisconsin has the 'use tax' concept on its income tax form 1 and 1A. Where and how does a private person/non-sole-proprietor file use tax in California?

[mdlbear]

One files for a seller's permit from the California State Board of Equalization; this also makes it possible for you to buy raw materials at places like Costco without paying sales tax.

I believe there's a box on the state income tax form that people who don't have a seller's permit can use to file use tax, but I've never heard of anyone actually using it.

[drewkitty.livejournal.com]

>> I may have to leave off some related expenses in order to convince the IRS that I've made a profit

Don't even joke about that, let alone put it in a public LJ post.