indiana Posted February 23, 2013 Share Posted February 23, 2013 After a little searching, I couldn't find a specific thread on this topic. Can someone explain the advantages (or disadvantages) of applying for reseller status with your state to purchase vending inventory (such as from Sam's Club, Costco or Vistar) tax free? I've seen several vendors on the forum here say this is something that should be done--but why exactly? The options I see available are: Apply for reseller certificate using my federal employment identification number, provide this information to my suppliers, and start purchasing inventory tax free. Then, at the end of the year, pay an additional 7% sales tax on gross receipts. Or--pay sales tax on inventory up front, and only pay income tax as usual. I believe each option still requires the business owner to claim and pay annual income tax on a schedule c (or as a larger Corp. or LLC) as I currently do. Link to comment Share on other sites More sharing options...
mission vending Posted February 24, 2013 Share Posted February 24, 2013 After a little searching, I couldn't find a specific thread on this topic. Can someone explain the advantages (or disadvantages) of applying for reseller status with your state to purchase vending inventory (such as from Sam's Club, Costco or Vistar) tax free? I've seen several vendors on the forum here say this is something that should be done--but why exactly? The options I see available are: Apply for reseller certificate using my federal employment identification number, provide this information to my suppliers, and start purchasing inventory tax free. Then, at the end of the year, pay an additional 7% sales tax on gross receipts. Or--pay sales tax on inventory up front, and only pay income tax as usual. I believe each option still requires the business owner to claim and pay annual income tax on a schedule c (or as a larger Corp. or LLC) as I currently do. In Texas at least, for full line you are required to pay sales taxes on the total vend price, not just what you paid for it. By getting a resale certificate you can buy tax exempt and pay it all at once instead of trying to keep track of how much you pay for the reporting period and taking a credit at the end of the period for the taxes already paid. Again, in Texas, bulk sales 0.50 or less are exempt from having to pay sales taxes so getting the certificate will save you money. You just need to check about the regulations in your state. Link to comment Share on other sites More sharing options...
executivevending Posted March 15, 2013 Share Posted March 15, 2013 Interested in what you decided to go with.. I'm in indiana as well and trying to figure out if i should get when as well. And how to get it. I have an EIN number and can't figure where to get that. All info's appreciated! Link to comment Share on other sites More sharing options...
indiana Posted March 16, 2013 Author Share Posted March 16, 2013 Interested in what you decided to go with.. I'm in indiana as well and trying to figure out if i should get when as well. And how to get it. I have an EIN number and can't figure where to get that. All info's appreciated! Definitely. I didn't realize you're also in Indiana! Very nice to meet a fellow Indiana vendor--what area are you currently located/servicing? I decided to apply for the reseller certificate, after rather extensively researching the topic, I understand we must pay 7% of all gross receipts to the state (in addition to federal income tax). This can be done by calculating the total amount due to the state and subtracting the total sales tax already paid on the inventory (without the reseller certificate), or no math needed if not paying any tax up front (using the reseller status). This year, I'm going to have to do a combination of both, seeing that I don't yet have the certificate in Indiana. I have the certificate already for the business I do in Illinois... all reasons why I hire an accountant to figure these things out for me Link to comment Share on other sites More sharing options...
AZVendor Posted March 16, 2013 Share Posted March 16, 2013 In Arizona, there is a state requirement to pay sales tax on all vending sales unless excluded by a deduction called "Food for Home Consumption." The general consensus is that if the vending product purchased can be consumed on the premesis due to facilities being provided, such as tables and chairs in a breakroom, then the sale does not qualify for the deduction and sales tax is due. Each city is able to issue its own sales tax license in addition to the state license and then each city can use the state for all sales tax collection or, in the case of larger cities, they can collect their own city tax. Each city can interpret the "food for home consumption" deduction however they want and most adhere to the State's interpretaion. Not all cities do though, and this is where some vendors got screwed (like I did). In my case, I was licensed by the state and then by each city I had vending machines in. The head of the Phoenix Department of Revenue decided in 1992 that if there was even a curb in the parking lot to sit on, then the "food for home consumption" deduction could not be taken. This guy then began picking vending companies at random for audits and I was one of seven lucky ones. I ended up losing most of the deduction I took in the 3yr lookback period and ended up owing $14000. Up until that time I was only paying for breakroom sales and coffee and cup soda machine sales as there was also a requirement to pay tax on foods the machine prepared. Well, after I borrowed $14k and paid it, meaning I could no longer appeal the assessment, the city changed it's interpretation of the deduction. This was partly, or mostly, due to the revenue dept. head murdering his wife in a swimming pool and a new dept. head going back to the state's interpretation. Karma's a golpher, ain't it? Link to comment Share on other sites More sharing options...
indiana Posted March 16, 2013 Author Share Posted March 16, 2013 Wow. That's really awful. I realize the law was technically different while you were vending, but given the extraordinary circumstances and subsequent interpretation change, I wonder if you could hire an attorney to sue the city to get your $14k back plus loan interest. It might be worth looking into at least--the attorney would probably take half of it--but you could potentially recoup some of that. While researching the state reseller certificate, I found a few cases (they seem to get published on the state website for the world to read about) of vending companies being audited, and each one I found ended with the vending company owner owing some kind of back taxes, interest and a penalty (usually due to incorrectly/not charging sales tax). The whole process sounds entirely unpleasant. Link to comment Share on other sites More sharing options...
executivevending Posted March 16, 2013 Share Posted March 16, 2013 Definitely. I didn't realize you're also in Indiana! Very nice to meet a fellow Indiana vendor--what area are you currently located/servicing? I decided to apply for the reseller certificate, after rather extensively researching the topic, I understand we must pay 7% of all gross receipts to the state (in addition to federal income tax). This can be done by calculating the total amount due to the state and subtracting the total sales tax already paid on the inventory (without the reseller certificate), or no math needed if not paying any tax up front (using the reseller status). This year, I'm going to have to do a combination of both, seeing that I don't yet have the certificate in Indiana. I have the certificate already for the business I do in Illinois... all reasons why I hire an accountant to figure these things out for me Yeah i'd love to hire an a accountant! Problem with only being 20 and 12.50 an hr at my regular job just trying to save my money now while i can. I probably will get a CPA by the ens of the year though. But i'm right by Purdue University. Slowly getting more and more locations in this area. Money's the only thing stopping me from having a lot more! Link to comment Share on other sites More sharing options...
indiana Posted March 16, 2013 Author Share Posted March 16, 2013 Yeah i'd love to hire an a accountant! Problem with only being 20 and 12.50 an hr at my regular job just trying to save my money now while i can. I probably will get a CPA by the ens of the year though. But i'm right by Purdue University. Slowly getting more and more locations in this area. Money's the only thing stopping me from having a lot more! And you're a fellow Boilermaker! I just (this month) finished grad school at Purdue! Great school. Good for you in building your business so early! After you're an alumnus, I'd definitely try to go after some university accounts and on-campus vending. While you're in school, have business/finance/accounting professors (if you have any) take a look at business plans, income statements and anything else you may have while building or growing your business. I did. Purdue (and most all colleges and universities) also has a variety of small business/entrepreneur programs for people like us that will help you with business planning, some accounting and local, state-specific issues. It's part of your tuition so definitely take advantage of those "free" services! Also take a closer look at accountants, I was surprised at how affordable they actually are (there may also be accounting clubs or similar organizations on campus you have access to for even less). With the help they provide in setting up your business finances and the tax deductions they help you plan for, I couldn't afford not to have one. And being a business expense, you're able to deduct the full price you pay for those accounting and consulting services. I'm a few hours north of you, but let me know if there's anything I can ever help with. Link to comment Share on other sites More sharing options...
executivevending Posted March 16, 2013 Share Posted March 16, 2013 And you're a fellow Boilermaker! I just (this month) finished grad school at Purdue! Great school. Good for you in building your business so early! After you're an alumnus, I'd definitely try to go after some university accounts and on-campus vending. While you're in school, have business/finance/accounting professors (if you have any) take a look at business plans, income statements and anything else you may have while building or growing your business. I did. Purdue (and most all colleges and universities) also has a variety of small business/entrepreneur programs for people like us that will help you with business planning, some accounting and local, state-specific issues. It's part of your tuition so definitely take advantage of those "free" services! Also take a closer look at accountants, I was surprised at how affordable they actually are (there may also be accounting clubs or similar organizations on campus you have access to for even less). With the help they provide in setting up your business finances and the tax deductions they help you plan for, I couldn't afford not to have one. And being a business expense, you're able to deduct the full price you pay for those accounting and consulting services. I'm a few hours north of you, but let me know if there's anything I can ever help with. I'm actually not going to purdue (unfortunately) just working. My dad is an owner of a dry cleaners here in town so he has a lo of knowledge on business that i've definitely been taking advantage of! Might be taking some accounting/business classes at ivy tech next semester for my own good but no degree. And thanks for the offer! Same goes for you! I may not know as much on fixing them as you might but i could definitely be a lending hand on helping you move machines if you ever need a second man. I'm also going to talk to my dads accountant and see about her prices as maybe she could cut me a deal. Link to comment Share on other sites More sharing options...
executivevending Posted March 16, 2013 Share Posted March 16, 2013 Did you fill out the form BT-1 to get the resale certificate? If not, where did you? Trying to figure this all out Link to comment Share on other sites More sharing options...
indiana Posted March 17, 2013 Author Share Posted March 17, 2013 Did you fill out the form BT-1 to get the resale certificate? If not, where did you? Trying to figure this all out This is the form I filled out and submitted to the state. https://www.dropbox.com/s/afzp1ojlz3cgagw/Indiana_ST105.pdf Link to comment Share on other sites More sharing options...
executivevending Posted March 17, 2013 Share Posted March 17, 2013 Can i use my EIN # as the TIN? It says 10 digits but mines only 9 (10i if you include the dash) and have no idea what the LOC # is Link to comment Share on other sites More sharing options...
indiana Posted March 17, 2013 Author Share Posted March 17, 2013 Can i use my EIN # as the TIN? It says 10 digits but mines only 9 (10i if you include the dash) and have no idea what the LOC # is You can use your federal employment identification number (FID/FEIN) if you do not have an Indiana TID number. There are instructions on the back (second page) of the PDF that includes the following information on ID numbers: For a purchaser not possessing either an Indiana TID# or another State ID#, the following may be used in lieu of this requirement: Federal Government – place your FID# in the State ID# space. Farmer – place your SS# or FID# in the State ID# space. Public transportation haulers operating under another motor carrier authority, or with a contract as a school bus operator, must indicate their SS# or FID# in the State ID# space. Nonprofit Organization – must show its FID# in the State ID# space. Link to comment Share on other sites More sharing options...
executivevending Posted March 23, 2013 Share Posted March 23, 2013 You can use your federal employment identification number (FID/FEIN) if you do not have an Indiana TID number. There are instructions on the back (second page) of the PDF that includes the following information on ID numbers: For a purchaser not possessing either an Indiana TID# or another State ID#, the following may be used in lieu of this requirement: Federal Government – place your FID# in the State ID# space. Farmer – place your SS# or FID# in the State ID# space. Public transportation haulers operating under another motor carrier authority, or with a contract as a school bus operator, must indicate their SS# or FID# in the State ID# space. Nonprofit Organization – must show its FID# in the State ID# space. I'm very confused on this. I've looked up to see if there is a difference between an EIN and a tax id number and there's not. On the resale certificate application it says your tax id # is 10 digits. My EIN is only 9.. Also says there is a 3 digit LOC number which i don't have. Link to comment Share on other sites More sharing options...
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