New Route Purchase

[AZVendor]

Vet,

Your description of the sales tax is correct, but as I said, check with the revenue department for any deductions you might be able to take. Paying tax on all the purchases may be more tax than you are actually responsible for if there are deductions to take when paying tax on the actual sales from the machines.

[TKK]

I heard that too right now I pay quarterly, but another vendor said he doesn't do it because he pays for tax when he buys products. I haven't really used the resale certificicate because I forget it, so I try to not add that to the quarterly ammounts. If audited, showing you pay regular sales tax, would that be ok or would you have to do your quarterly reporting sales tax? Now chips and food items have no tax vs soda that does

[AZVendor]

Every state and municipality have their own retail sales tax codes. You have to check locally to find out the proper way to account for your tax liabilities.

[mission vending]

Every state that I am aware of REQUIRES sales taxes to be paid on your TOTAL revenue. In some cases you get some exemptions based on what you are selling and how you sell it.

The seller, in this case, by paying sales tax at the register is not paying sales tax on the markup. Intentional or not this is FRAUD and is punishable both as a civil AND CRIMINAL offense.

If you buy this route I'd highly recommend you get a signed and notarized statement that the seller agrees and understands that he is responsible for ALL taxes due up to the date of sale. If not and IF you ever get audited you could be left holding the bag for the unpaid taxes the seller owess and continues to accrue every day that he continues to do this.

[Veteran Vending Services]

All,

Below are the manufacturer and model numbers associated with this route. thanks for all the feedback!

3- MODEL 3509 USI SNACK MACHINES

2-MODEL 3509 USI SNACK MACHINES

1- VENDO MODEL 600 SODA MACHINE

1-MODEL 501ER DIXIE NARCO SODA MACHINE

1-MODEL BC-100 BILL CHANGER

1-MODEL 670 CRANE COFFEE MACHINE

1- MODEL 3532 USI FROZEN FOOD MACHINE

1-MODEL FSI 3039 SNACK MACHINE

1-DN 440 SODA MACHINE

1-MODEL 3509 USI SNACK MACHINE

3-MODEL 3509 USI SNACK MACHINES

1-MODEL 3535 USI SNACK MACHINE

1-AUTOMATIC PRODUCTS MODEL LCM 2 SNACK MACHINE

1-MODEL DN 700 CV CHILLED SNACK MACHINE

1-MODEL F631 FASTCORP FROZEN FOOD MACHINE

1-MODEL 3053 USI SNACK MACHINE

1- 2 COLUMN LAUNDRY DETERGENT DISPENSER

1-2 COLUMN TAMPON,MAXI PAD DISPENSER

1-MODEL 3053 USI SNACK MACHINE

IN WAREHOUSE:

1-TAMPON MACHINE

1- MODEL BC-100 BILL CHANGER

2- COIN COUNTERS

1-BILL COUNTER

[Veteran Vending Services]

I found this on the TN Dept of Revenue page. I think I will use the sales tax exempt certificate and not pay sales tax on the product when I buy it and take advantage of this.

- -persons operating vending machines may register at a fee of $2, plus $1 per machine and pay 1.5 percent of gross receipts from the machines instead of privilege and sales taxes, except that the tax on gross receipts from tobacco-dispensing machines is 2.5 percent

By the way, TN DOES have a sales tax on food products. I will also take the advice of doing a notarized agreement that the seller is responsible for all taxes up to the date of sale. I think that is a very good idea.

Does anyone have any comments on the manufacturer and models of the machines I listed above?

Thank you.

[moondog]

I found this on the TN Dept of Revenue page. I think I will use the sales tax exempt certificate and not pay sales tax on the product when I buy it and take advantage of this.

- -persons operating vending machines may register at a fee of $2, plus $1 per machine and pay 1.5 percent of gross receipts from the machines instead of privilege and sales taxes, except that the tax on gross receipts from tobacco-dispensing machines is 2.5 percent

By the way, TN DOES have a sales tax on food products. I will also take the advice of doing a notarized agreement that the seller is responsible for all taxes up to the date of sale. I think that is a very good idea.

Does anyone have any comments on the manufacturer and models of the machines I listed above?

Thank you.

Looks to be some decent equipment - definitely no junk and all within 10 years old (except the soda machines - only three ?). I can't speak to the quality of the tampax machines as I've never used one

[AZVendor]

Vet,

It looks like most of the USI equipment is very new. The machines with 3500 series numbers are late models. This means that you should try hard to determine if he owes money on the machines. See if he has bills of sales that shows how he paid for the USI stuff. If he paid with a check, cash or credit card, then there should be no liens on them.

All of the equipment looks like top quality stuff. The oldest pieces by age are the DN440, Vendo 600, FSI 3039 snack, USI 3053 snack, DN700 snack, Fastcorp F631 and the AP LCM2. None of this equipment is poor quality or poorly recommended. You will have a nice route here. The great thing is that you can get parts and tech support for all of them.

[Veteran Vending Services]

All,

When I meet the seller of this route next week, would it be appropriate to ask that I meet each one of the decision makers where the machines are located to ensure that the accounts would continue doing business with me if I buy the route? I just want to be assured, as much as possible that the accounts will not change vendors if the current owner sells the route. I also would ask them if they would be willing to sign a service agreement if I bought the route. Any harm in doing this?

Thanks

[AZVendor]

Until you actually own the route, it would not be appropriate to ask those questions of the locations. You can certainly ask the current owner how he thinks the locations will react to such questions and which accounts he feels the most secure at, but don't speak as an owner until you are.

Once you are the owner, you should introduce yourself to make them aware of who you are and where the buck stops. Give them each a couple of business cards with your cell phone number and be prepared to answer it at night and on the weekends. Make sure your phone number is professionally displayed on each machine. You also don't want to rock the boat too early in a new business relationship, so when you are comfortable with running the route and the accounts can see you as a competent vending business owner (no excessive sold outs, machines not broken, machines clean, filled and working, commissions on time) then you can begin to seek long term contracts.

Don't expect every account to be open to a contract. Many like having the ability to boot you out easily without repercussions. You will come to learn that vending is very much a handshake type business. If you do a good job, the account generally will keep you for a long time. New accounts with newly purchased equipment and shaky accounts are the ones you want contracts for, but remember, a contract is only as good as your willingness to enforce it. If an account makes it clear they don't want you there, contract or not, it's generally best to not fight it and move on to an account who will appreciate you. Vending is way too often treated as a commodity by decision makers and not recognized for the value and level of convenience it provides. Your job is to teach them the latter.

[Veteran Vending Services]

I met with the seller of the route and rode with him yeserday and it seems like a large route for me to work as a beginner.  I was looking at hiring an experienced route person to help me for the first year until I can get the hang of everything.  Would a good way to work the salary be a percentage of gross sales?  I would provide the vehicle and everything and ride with him everyday until I'm trained and comfortable with doing it alone.  He would essentially be working his self out of a job.  Does anyone have a salary they pay their drivers/machine servicers.  He would be training me at the same time.

 

Thanks

[mission vending]

I met with the seller of the route and rode with him yeserday and it seems like a large route for me to work as a beginner.  I was looking at hiring an experienced route person to help me for the first year until I can get the hang of everything.  Would a good way to work the salary be a percentage of gross sales?  I would provide the vehicle and everything and ride with him everyday until I'm trained and comfortable with doing it alone.  He would essentially be working his self out of a job.  Does anyone have a salary they pay their drivers/machine servicers.  He would be training me at the same time.

 

Thanks

For a newbie it is a big bite off of the apple. For a experienced owner/operator vendor its also a pretty big bite but it is quite doable. I would suggest you spend 30 days or so with the current owner to develop some of the basic skills and knowledge that you will need. If you still feel overwhelmed then consider hiring someone to work with you to load sodas etc to save some time during the day.

 

From my experience I would be concerned that you would become dependent on a "experienced" route driver and once he learns that you don't have a lot of experience and would take advantage of that and you as well.

 

You've done you due diligence, the price seems right, the equipment is right.  You should have the ability to consult with the owner for several months after basic training. Have you met with a bookeeper or accountant? Make sure you understand your obligations as a business owner.

 

Part of being a entrepreneur is having confidence in yourself and being willing and able to take a risk and step out into the unknown. If you are lacking in confidence to pull the trigger on this deal then I would also question your long term survival in this business. Being self-employed is hard, very hard at times, and not just in vending. If you don't have a certain amount of intestinal fortitude and confidence then it becomes harder. Not trying to talk you down but being upfront with you. You will face difficulties, you will face doubts and you must know in your heart that you have the strength to push through the hard times.

[moondog]

I met with the seller of the route and rode with him yeserday and it seems like a large route for me to work as a beginner.  I was looking at hiring an experienced route person to help me for the first year until I can get the hang of everything.  Would a good way to work the salary be a percentage of gross sales?  I would provide the vehicle and everything and ride with him everyday until I'm trained and comfortable with doing it alone.  He would essentially be working his self out of a job.  Does anyone have a salary they pay their drivers/machine servicers.  He would be training me at the same time.

 

Thanks

 

No way Patrick - you can do this and you don't need an employee.  My route is almost exactly this same size and I do it in six days a month.  Is it work ? - you bet - but there's no rocket science here.  I can appreciate how it may seem a bit overwhelming after the first day but it's not that hard after you've done it a few times.  

 

Yeah, it's a larger route than most vendors start with but they have full time jobs.  Split it up so you can cover it over twelve days ( you've got the time ) so you're not so pressured initially and pretty soon you'll find you're able to condense it back to a normal schedule.

 

If you hit a snag, all you have to do is ask the question.  In the vending business, nobody's going to die if it takes you a little longer to get something done.

 

That said, your chances of finding somebody with vending experience that's willing to work six days a month for a short time, is somewhere between nil and none.

[AZVendor]

You would be better off running this entirely yourself.  This is a small route (around 20-25 machines?) and with sufficient training by the seller you will pick up the most crucial things you need to know.  The rest is going to be learned by experiencing the life of vending.  You will learn how to work quicker and smarter by trying a variety of methods of operating, there are always to do things faster.  You have already asked many questions that the average vendor doesn't even think to ask about, so you are a step ahead of most new vendors.  This route will seem daunting at first, but with perseverance you will do fine.  The more training you can get the better off you will be.  Try to get the seller to be available by phone if you encounter any problems.   I do think you might be over-thinking the difficulty of this new venture.  Don't forget you always have answers here on this forum, too.

[Southeast Treats]

First - best of luck!  I bought my core route in 2011, just a little smaller than yours, and have been working and learning it every day since!  I can't afford an employee as their pay would eat any profit, but I hope to grow to that size going forward.  If his numbers are correct you should be able to make some money out of it quickly.  Just remember that if you borrow money to buy the business that debt service eats into your cash flow pretty deep sometimes!   I just took over some 3rd party bottler machines to see if that would help grow my business, the issue is the bottler charges much more for product that retail and requires a large quota, if you don't make quota you can't get any new or replacement machines... so you pay for the machine one way or another.  Some people swear by it tho, because you get all maintenance and repairs done for you on their equipment.  Also, find out who does equipment repair in your area and go see them, make sure you have a source for repair help!