What to ask the seller while meeting at locations

[nrpick44]

Ive got a handful of questions in my head but what would you guys/gals ask if you knew very little about buying a small route? Thanks in advance!

[jt13]

I'm going through the same thing right now. Make sure you find out about commissions and sales taxes. If he's using it strictly as a cash business then don't believe the profit or revenue numbers; you'll need to collect and pay sales tax for your jurisdiction.

[nrpick44]

Just to make sure im on the same page, but "sales tax" is when Im buying the product at sams or costco right?

[jt13]

Sorry I wasn't more clear. For instance, in DC, you have to pay 6% sales tax on total sales from all vending machines. You can get a reseller permit from the DC business office so when you go to sam's club you won't have to pay the tax when you buy.

[mission vending]

Just to make sure im on the same page, but "sales tax" is when Im buying the product at sams or costco right?

Sort of, ordinarily when you go into Sam's as a buyer you would, depending on the state, pay sales taxes on the items you purchase, if they are considered taxable. If you are buying and reselling product AND it is considered taxable in your state then YOU are responsible for the reporting, collection and remitting of sales taxes. You could get a "resale" permit which would allow you purchase items tax-free at Sam's or you could  track the sales tax paid and take a credit on the reports you file for sales taxes already paid.

[Bender]

If you're talking about food products in CA, there is no sales tax.  The only time you will be dealing with sales tax issues is if you're vending toys and other non-food products.  Listen to JT's advice, get your state reseller's permit, and give a copy to Sam's Club or whichever vendor you buy your product from.  When you buy for resale, YOU don't pay sales tax, but you do have to collect sales tax from your customers.  That means you have to keep careful records, calculate your sales tax liability and file and pay a sales tax return each year.  For a 50 cent vended product in CA, you would owe 5 cents each sale (+-10% sales tax).  Technically, the customer is paying the tax, but because you can't vend for 55 cents, you have to eat the 5 cents out of your bottom line.  So if you have annual gross sales of $20,000 for vended toy products, you would have to "collect" 10% sales taxes and pay $2,000 to the tax board.

In CA, I am never assessed sales tax on any bulk food products I buy, whether I'm claiming it's for resale or not.

I'm wondering, there is sales tax on (non-restaurant) food in D.C.?  I thought food products were free from sales tax nationwide, including food sold in vending machines.  It was my understanding only toy products would be subject to sales tax.  In California, vended toys 50 cents or more are subject to sales tax.  25 cent toys and bulk food are exempt from sales tax.

Consequently,  in CA, there is no sales tax for a Subway brand sandwich if it is served cold and ordered to-go.  If you order it toasted, or take it eat-in, you have to pay sales tax.  Screwy, eh?

[mission vending]

I'm wondering, there is sales tax on (non-restaurant) food in D.C.?  I thought food products were free from sales tax nationwide, including food sold in vending machines.  It was my understanding only toy products would be subject to sales tax. 

Every state has it's own unique set of rules when it comes to sales taxes. In Texas if it comes out of a vending machine it might be taxed a couple of different ways. Here is a brief synopsis:

1. Water is non taxable, only water, ....... any flavoring added to it makes it taxable.

2. Confectionery items are taxable (pastries, candy, choc bars etc.)

3. Food snack items are taxed at 50% of the vend price. For example on a 50 cent Frito vend you only pay sales taxes on .25 cents.

4. Cold food is considered RTE and is taxable

5. The same items sold frozen are not considered RTE and are not taxable, as long as you don't provide a microwave and condiments.

So I would agree that the sales tax system, like most gov't functions is quite screwy. 

[nrpick44]

It almost sounds like it easier to just pay the sales tax when I purchase the items rather than keep up with it myself after the fact. Am I the only one who thinks this way? Thanks for all the info so far fellas.

I maybe way off on this too but, would i pay less sales tax on the items at Sams( because theyre cheaper ) rather than paying it on the price that I charge in the machine? I have to be missing something here.

Thx again in advance!

[mission vending]

Even if you paid the taxes at Sam`s you will still have to pay additional taxes on the difference between your purchase price and sale price.

Persnally I think its easier to buy tax exempt and write one check at the end of the month than it is to try to keep up with how much you paid during the month.