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kbacon3231
02-20-2006, 11:05 PM
When buying materials like mulch, rock, ect to do a job what qualifies you to be able to buy these items tax free? Like when you go to Tractor Supply Co. and the ask you are you tax exempt at the counter do i say yes if its for my buisness. This will be my first year totally legal and i keep hearing you can buy material tax free. I just dont want to look like a jacka$$ when i tell them i want it tax free and not reall yknow what im talking about. Help on this will be greatly appreciated.

BSDeality
02-20-2006, 11:15 PM
in CT you have to file for a tax exemption certificate, and you must provide it to each of your suppliers.

palawnman
02-20-2006, 11:49 PM
in CT you have to file for a tax exemption certificate, and you must provide it to each of your suppliers.

what makes someone eligible for a tax exempt cert.? just the fact that it is for business purposes?:confused:

Ron

newz7151
02-21-2006, 12:31 AM
what makes someone eligible for a tax exempt cert.? just the fact that it is for business purposes?:confused:

Ron

It's not a tax expemtion like it would be if you were say a non-profit group or church..

It's a RESALE Exemption, which means that you are reselling the item(s) and the sales tax will be collected at that point. Double taxation thing..

BSDeality
02-21-2006, 12:33 AM
newz is correct, i didn't mean to say tax exempt but rather resale exemption

CLARK LAWN
02-21-2006, 12:54 AM
When buying materials like mulch, rock, ect to do a job what qualifies you to be able to buy these items tax free? Like when you go to Tractor Supply Co. and the ask you are you tax exempt at the counter do i say yes if its for my buisness. This will be my first year totally legal and i keep hearing you can buy material tax free. I just dont want to look like a jacka$$ when i tell them i want it tax free and not reall yknow what im talking about. Help on this will be greatly appreciated.
you need the number on you state vendors license. should start with an 89xxxxxx. you will have to fill out a tax exempt form at each of your suppliers and they will keep it on file. Only items that will be RESOLD to a customer are tax exempt(mulch,rock,ect.) but not n tools or equipment.

topsites
02-21-2006, 04:19 AM
what makes someone eligible for a tax exempt cert.? just the fact that it is for business purposes?:confused:

Ron

No...!

If you want to be tax exempt (of sales tax), then you would need to classify your business as a service AND retail business, not just service. In addition, you would need to charge the customer the tax and file monthly paperwork with the state and pay them the tax you got from the customer (you have to send a check for the amount of tax you collected), so it is not free money.

As a general rule, a tax exempt status for a retail business is only profitable when the business can charge a markup in addition to the tax, meaning they sell the product at anywhere from 10 to 300 percent over what they paid for it, most of this depends where they get the product versus the actual street retail value... so buying a 5-dollar product at the grocery store and charging the customer 15 dollars is not cool like that because the retail value is 5 dollars, it would only work if you can get the 5-dollar product for a buck or two... Ok, maybe you can work it if that's part of how you get paid (for picking it up), but it's a lot of extra hassle...

Why not save yourself the hassle, pay the regular price like everybody else and charge the customer the price of the receipt (no money made here). But since you are a service business, you can charge a 40 dollar service fee (or whatever you think is fair) for picking stuff up and taking it to their house. Now you're only charging for your time and equipment involved (such as your truck and trailer), and the customer pays for the stuff the same money they would pay if they went to get it themselves. This bit comes in handy and becomes profitable once you're delivering a few hundred pounds (say seed and fertilizer) of stuff, it will quickly become obvious there is actual work involved in loading and unloading, too.

As for me, I charge 30 dollars (thou I'd like to get 50) so the way I do it is I combine trips, and I start earning a small profit once I can combine 2 or more loads into one trip to the store (2 is ok, 3 is good, 4 is great, 5 I've never been able to do lol).

Hope that helps.

yrdandgardenhandyman
02-21-2006, 06:29 AM
No...!

If you want to be tax exempt (of sales tax), then you would need to classify your business as a service AND retail business, not just service. In addition, you would need to charge the customer the tax and file monthly paperwork with the state and pay them the tax you got from the customer (you have to send a check for the amount of tax you collected), so it is not free money.

As a general rule, a tax exempt status for a retail business is only profitable when the business can charge a markup in addition to the tax, meaning they sell the product at anywhere from 10 to 300 percent over what they paid for it, most of this depends where they get the product versus the actual street retail value... so buying a 5-dollar product at the grocery store and charging the customer 15 dollars is not cool like that because the retail value is 5 dollars, it would only work if you can get the 5-dollar product for a buck or two... Ok, maybe you can work it if that's part of how you get paid (for picking it up), but it's a lot of extra hassle...

Why not save yourself the hassle, pay the regular price like everybody else and charge the customer the price of the receipt (no money made here). But since you are a service business, you can charge a 40 dollar service fee (or whatever you think is fair) for picking stuff up and taking it to their house. Now you're only charging for your time and equipment involved (such as your truck and trailer), and the customer pays for the stuff the same money they would pay if they went to get it themselves. This bit comes in handy and becomes profitable once you're delivering a few hundred pounds (say seed and fertilizer) of stuff, it will quickly become obvious there is actual work involved in loading and unloading, too.

As for me, I charge 30 dollars (thou I'd like to get 50) so the way I do it is I combine trips, and I start earning a small profit once I can combine 2 or more loads into one trip to the store (2 is ok, 3 is good, 4 is great, 5 I've never been able to do lol).

Hope that helps.


What if I'm buying at a "contractor's price"? Changes things doesn't it? :rolleyes:

kbacon3231
02-21-2006, 04:07 PM
Thanks for the help on that. OK here is another question. Now that i dont have to pay sales tax for resale items how do i get them to cut me a deal on mulch and other items like that. Tell the guy selling the mulch i would strictly buy mulch from him if he can give me a deal? I usually dont buy it more than 5 to 6 yards at a time so buying a large quantity at once does help. Nor do i have a place to store a mountain of mulch. Like i said this is my first real year so they probably will not heard of my company before.

yrdandgardenhandyman
02-21-2006, 04:25 PM
Thanks for the help on that. OK here is another question. Now that i dont have to pay sales tax for resale items how do i get them to cut me a deal on mulch and other items like that. Tell the guy selling the mulch i would strictly buy mulch from him if he can give me a deal? I usually dont buy it more than 5 to 6 yards at a time so buying a large quantity at once does help. Nor do i have a place to store a mountain of mulch. Like i said this is my first real year so they probably will not heard of my company before.


Just tell them you are a contractor, show your sales tax permit and most will just offer contractors' price. Tell them it's for resale and you can get tax exempt. You will probably have to fill out a form the first time.
Just remember that you have to collect sales tax on the amount the client pays you and not on what you paid. The state will get their piece of the pie.
Contractors' price on, say mulch, saves me about 25% on the price. So I can sell it at retail, charge for delivery and install and make a reasonable amount of money and still give the client a fair price. :drinkup:

NickN
02-21-2006, 04:26 PM
Just apply for your reseller number.It's a pain at first,but when you're buying plants at 1/2 price,marking them up and then charging an install fee,you'll see why you need it.Those $$$'s add up pretty fast.In Alabama,if you get your money in on time,at the end of the month,you're allowed to keep a portion of it,so you do indeed make money on the taxes collected.

yrdandgardenhandyman
02-21-2006, 04:38 PM
Just apply for your reseller number.It's a pain at first,but when you're buying plants at 1/2 price,marking them up and then charging an install fee,you'll see why you need it.Those $$$'s add up pretty fast.In Alabama,if you get your money in on time,at the end of the month,you're allowed to keep a portion of it,so you do indeed make money on the taxes collected.


Here, if you pay on time, they don't charge you 5% penalty. :) That's the best break they got.

Every state is a little different. Check with your state's dept of revenue.

old dog 80
02-21-2006, 05:29 PM
what makes someone eligible for a tax exempt cert.? just the fact that it is for business purposes?:confused:

Ron
In Penn you have to get a sales tax license.Contact your local Pa.
Dept. of Revenue and ask for sales tax specialist

crzymow
02-21-2006, 11:57 PM
No...!

If you want to be tax exempt (of sales tax), then you would need to classify your business as a service AND retail business, not just service. In addition, you would need to charge the customer the tax and file monthly paperwork with the state and pay them the tax you got from the customer (you have to send a check for the amount of tax you collected), so it is not free money.

As a general rule, a tax exempt status for a retail business is only profitable when the business can charge a markup in addition to the tax, meaning they sell the product at anywhere from 10 to 300 percent over what they paid for it, most of this depends where they get the product versus the actual street retail value... so buying a 5-dollar product at the grocery store and charging the customer 15 dollars is not cool like that because the retail value is 5 dollars, it would only work if you can get the 5-dollar product for a buck or two... Ok, maybe you can work it if that's part of how you get paid (for picking it up), but it's a lot of extra hassle...

Why not save yourself the hassle, pay the regular price like everybody else and charge the customer the price of the receipt (no money made here). But since you are a service business, you can charge a 40 dollar service fee (or whatever you think is fair) for picking stuff up and taking it to their house. Now you're only charging for your time and equipment involved (such as your truck and trailer), and the customer pays for the stuff the same money they would pay if they went to get it themselves. This bit comes in handy and becomes profitable once you're delivering a few hundred pounds (say seed and fertilizer) of stuff, it will quickly become obvious there is actual work involved in loading and unloading, too.

As for me, I charge 30 dollars (thou I'd like to get 50) so the way I do it is I combine trips, and I start earning a small profit once I can combine 2 or more loads into one trip to the store (2 is ok, 3 is good, 4 is great, 5 I've never been able to do lol).

Hope that helps.

Well at least in PA you still have to charge sales tax on the labor of installing the mulch. so im goin to have paperwork anyhow. So if i can save paying sales tax on 100 yds of mulch at $13 a yd that saves me $78. Then when i turn around and sell it to my customers i charge them the sales tax so its not coming out of my pocket then either.

old dog 80
02-22-2006, 06:57 PM
Just remember every state is different.What is law in Virginia may not be
here in Pennsylvania.And the lawmakers are in office to make it rougher
on everyone every year!

olderthandirt
02-22-2006, 07:38 PM
Thanks for the help on that. OK here is another question. Now that i dont have to pay sales tax for resale items how do i get them to cut me a deal on mulch and other items like that. Tell the guy selling the mulch i would strictly buy mulch from him if he can give me a deal? I usually dont buy it more than 5 to 6 yards at a time so buying a large quantity at once does help. Nor do i have a place to store a mountain of mulch. Like i said this is my first real year so they probably will not heard of my company before.
Just ask for contractors price.
You should be shopping at the big whls. yards and not the TSC or the chain stores.
Also when you claim tax exemt for materials you better be collecting and sending in your state sales tax each month

kbacon3231
02-23-2006, 11:23 PM
olderthandirt I do have a Service vendor's liscense so i will be taxing cutomers and paying taxes. TSC was just an example of a place that asks every time your in there if you tax exempt. I mainly wondering about the mulch. Thats about the only materials i buy that i resell. Last year i was buying mulch from 25 to 30 dollars a yard locally. It is pretty hard to mark up the price, installation fee and delivery and still make a decent profit.I was only able to charge around $55 a yard installed without customer looking at me like im a lunatic. Surelly this year i should be able to have a higher profit margin. Thanks for all the great info it has helped alot

olderthandirt
02-23-2006, 11:30 PM
olderthandirt I do have a Service vendor's liscense so i will be taxing cutomers and paying taxes. TSC was just an example of a place that asks every time your in there if you tax exempt. I mainly wondering about the mulch. Thats about the only materials i buy that i resell. Last year i was buying mulch from 25 to 30 dollars a yard locally. It is pretty hard to mark up the price, installation fee and delivery and still make a decent profit.I was only able to charge around $55 a yard installed without customer looking at me like im a lunatic. Surelly this year i should be able to have a higher profit margin. Thanks for all the great info it has helped alot
what part of Ohio are you in? you can Pm if you want. mulch $12 a yd for double ground delieverd in walking floors 80-100 yds at a time. Or $10 a yd picked up any amount. and if your north or near any major city you should be getting $70 yd to deleiver and spread it.

BTW--Also when you claim tax exemt for materials you better be collecting and sending in your state sales tax each month

This was said to let you know thats one of the easiest way to get audited 10k in tax exempt purchases and onlt 20k in sales and you will be throwing up red flags

crzymow
02-24-2006, 01:44 AM
where in ohio are u mac? Im near erie pa, curious as to where u get your mulch.