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taxes and managing a business

updated mon 30 aug 04


Sam or Mary Yancy on sat 28 aug 04

In the 60's and 70's, when I has a business cusom painting motorcycycles and cars/trucks, when buying materials or tools/equipment I aliways paid the state tax on it (all materials,supplies and equipnent. Note this was before e-mail buying BUT i had a Fed business number so I got lower costs and really did not have to pay sales tax - but I insisted to do so when buying anything for the business.
BECAUSE of this - . All I charged the customer was a "service fee" which is non taxible and I did NOT add sales tax. . Everybody was happy incLuding the state and Feds - got audited several times over the years. A couple of times a "ringer" was brought in to "test" my way of doing business. As I had try-fold receipts, one for the buyer, one for my accountant and a extra just in case (I insisted the buyer of my services take a receipt), AND I reported ALL earnings (usually got paid on cash) there was never any problem. Don't know if this would work anymore, but sure saved a lot of bookeeping., check writing, and got a lot of customers as I did not (or had to) charge sales tax. Sam in Daly City
Note: Perhaps some of the clayart experts can comment on this way of doing business. In my opinion, making a pot is a SERVICE so no tax as long as I pay all taxes on marerials, equipment, electricity and so on. What say?????