Wednesday, November 11, 2009

Your Tax and Business Questions Answered! Q&A with Valorie

I am so excited to have Valorie Clifton as guest blogger today! She will be answering your tax and business questions on occasional posts in this blog. The first question today is.......

Q.  What is a tax ID?

A.  A state tax ID number is issued by your state's Department of Revenue when you register for sales tax and use returns.  You should check with your state for specific rules since each state has their own requirements.   This tax ID number identifies you to your state as a business.  Registration is simple and free and can be done online.  Your Department of State website will have their state specific rules concerning sales tax returns.  Most small businesses online will use a quarterly format.  This tax ID number comes on a certificate (my state has orange certificates) and you can photocopy them for use!!   Keep the original in a safe place at home.

Let me explain:  if you go to a retailer --let's say... Hobby Lobby for jewelers--  and present this signed tax certificate copy to their customer service desk, they register you in their little tax free book as a business.  Sometimes they give you a little card with numbers on it.   Now, each time you purchase a component- an item that is used in your jewelry such as beads, clasps, wire, etc- you can purchase them sales tax free.  You can purchase supplies that are made for resale tax free because the state figures they will recoup the tax on your finished product.  Consumables are not eligible for the tax free treatment. (ie flux for welders or consumable supplies that aren't in the finished product.).  Neither are office supplies.  Don't abuse the system or they will fine you!  This means you can't use the certificate for personal use items.  If buying beads for yourself do not use it or you will have to repay the State.  You do not have to tell the state on your return which items were purchased tax free as long as it is used for business purposes.  Keep a record for yourself because if you convert your business use items to personal use and you bought them tax free, you will have to pay a use tax on them later.  We may delve into use taxes in another blog.  Stay tuned! :)

About Valorie: 
My name is Valorie Clifton and I own Valorie Clifton's Artisan Originals, and I make jewelry and sell photographic prints in my Etsy shop.  I also have an Artfire shop and my own website which needs updating.  I work for a major national tax preparation company as a bookkeeper and as a tax preparer.  I perform corporate, business, and personal tax services.  I'm doing this blog independent of my employer.  

My websites are:  

Want to ask Valorie a question? Post it here!

1 comment:

  1. Love reading about tax topics! Great job. Tax is so complicated, it is nice to read about it from someone with experience.