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Not in the biz yet, have a few questions.


Arutkow

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I am interested in getting into the food/snack vending business, but I have a few questions for those with experience (and this is obviously the best place to ask :P )

 

I live on the border between Indiana and Michigan, and I would see no problem having my machines in either state.  Michigan has a 10 cent deposit on its carbonated products but Indiana doesn't.

How does the deposit get paid to the state in a vending situation?  If I buy the products in Michigan, I obviously pay the deposit to the retailer. And when I sell the products in my Michigan machines, the deposit will be included in the price (and noted on the machine that the price includes "Tax and Deposit").  Am I required to report to the state the deposits I collect?

 

I am also curious about what type of business to form (if any).  I would assume with larger operations, and for people doing this as full-time income, creating a corporation or LLC would be best, for both tax reasons, and liability issues.  At what point would you consider becoming a separate business entity?

 

I currently manage a restaurant, and I spoke with the health inspector.  he said that in Michigan, vending machines are subject to health inspections. This surprised me. Has anyone ever had their machines inspected?

 

Thanks in advance for the help. :)

 

 

-Abram

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Welcome to the forum!  You are at the place with the most complete information available for new vendors. 

 

I am in Arizona so I can only speak to the question regarding forming a business entity.  You have four choice you can use: sole proprietor, LLC, S-Corp and C-Corp.  The sole proprietor is the easiest if you aren't worried about any liabilities that you could be sued for, just be sure to keep your business and personal lives seperate.  LLC is the easiest liability-protected entity to use, with S-Corp (Incorporated sole proprietor) the next easiest and a C-Corp being the most complicated.  Do some Google searching to investigate the differences in each and to determine which you will be most comfortable with.  Most people choose LLC's if they aren't simply a sole proprietor. 

 

If you choose a sole proprietor you can use your SSN as your Federal Identification Number or you may request the IRS to assign you a FEIN or Federal Employer Identification Number.  This doesn't apply because you intend to have employees, it's just the name of the number and can be used by a business with one employee (yourself) or many employees.  If you opt for any of the liability-protected entities you will be required to use a FEIN. 

 

One other legal decision you will need to make is whether you will report your business income on a cash basis or an accrual basis (for a business with receivables).  Speak to your accountant regarding this subject. 

 

Good luck with your venture and post any questions you can't find answers to with a search.  My advice to you is read, read and read more.  I'm sure some of our members from your states will be along to answer your other questions.

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Your business can be based in either state for income tax purposes, but you might have to hold seperate sales tax licenses in each state and pay any required sales tax to the states the tax was generated in, unless your home state allows you to report out of state sales, as ours does.  The fact that you will have to travel personally to the other state to fill your machines and collect the money, that might not qualify as non-taxable out of state sales because your machines, being physically located in the other state, could qualify as a presence in that state.  The other state may have its own statutes addressing this issue as well.  The only way to know for sure is to research your home state's sales tax statutes and those of the foreign state.  For example, here in Arizona I don't have to collect sales tax on parts I ship to customers in other states, only to in-state customers because my physical presence is only in Arizona.

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Thanks AZ 

 

Perhaps I will just start with the state I live in and plan to have my business in.  Even though I live 1/4 mile from Indiana, it doesn't sound like it will be worth the trouble.

-Abram

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