how do you handle your taxes???

Okay, I did download Shannon's spreadsheet. Which btw is really helpful....I am getting ready to turn in my yearly sales taxes...not my regular whole shabang tax. I file yearly rather than monthly on the sales tax. But it got me thinking about how I am really supposed to be doing this. We just ran everything under a 1099 before. But, we have since added a few gift items,balloons, glowing swords, and you know just festival stuff. So, I have to have a sales tax ID for my state.

Now, I talked to the sales tax people earlier in the year for my state,and asked them if I was supposed to be collecting sales tax for face painting. What they said was, " You will charge taxes on any tangible item that people can physically take away with them. You will not charge taxes on any item that is considered a service."

So, in my mind I think fairy wings, hats, balloons (although it doesn't seem that most people collect tax on that) and then face painting is an entertainment service so no tax on that. Is that what you guys do? I mean do you charge taxes on balloons?

Then separately for my income tax am I supposed to deduct everything that I spent out for materials and advertising...like general costs before I turn in my income for what I did in face painting right? Just like a regular business...I have not started yet, but just making sure I do not mess up.The sales tax was nerv racking enough to me.LOL! It is hard to keep it all separated. I wrote it all down on a tablet in an organizer and heaven help me if I were to lose that thing.

I am gathering my records up.I have kept everything like my insurance cost and invoices and gas recipes in a folder. I am sure that I have lost some as that I am not terribly organized and often lose receipts for smaller purchases in my van or something. ( You know like for supplies or water or whatever) But major things I do have. Anyway....I know this is long but, I would like to get things organized for this coming year and know that some of you that have been in this type of business longer than me can really help me. I have owned other businesses before like a wedding/floral store and we had our builders license. But it was just different than this. Thanks in advance!!!!

Talk to an accountant. Honestly, just go and find one in your jurisdiction and let them tell you what you need to do in YOUR area.

Asking us is really pointless as laws vary country to country and state to state, etc.

Sure we can give you general advice about what WE do in our area - but I have an accountant and simply give him my books and he does the rest.

Thanks Shannon...I did hire an accountant. We are supposed to meet with him next week actually. He was the same accountant that we used when we had our other businesses. But, throughout the year I am responsible to keep things organized so, I was curious how everyone else did it. Most states would require you to charge sales tax (I would think)...the % might be different though....I did take the tax on the balloons. But, I was curious if there was a better way to group it. I was also curious if people charged tax on the face paint itself. It almost seems that it would be better to do that to me. Although I am not, I guess that is where the 1099 comes in at. Anyway, thanks for responding...

I'm glad you asked the question - I'm just across the state line from you and have always had an accountant for my other business, but because I did not make any income at all in 2010 I can defer my expenses to 2011. So for now I know to keep track of all my business expenses etc., but if we do offer balloon twisting or I offer other "products" where is that line drawn? I hadn't thought about sales tax...(my other business is web design - it is all a service).

Wow, you are lucky down there. It feels like we're taxed to death, we have a goods and services tax on everything added onto every purchase with both a federal tax and a provincial tax. Where I am at on the earning scale I don't have to charge GST and PST yet but I do have to keep very careful records and receipts for income tax time. I take everything to an accountant (it is included with my husbands business) but I have to have it all sorted out and I have to be careful. Last year she goofed up and made some changes which I caught before we signed and filed them and I saved us over $1000, uggg, that's her job, so frustrating!

The tax laws for small businesses changed in Ontario recently, so businesses making less than $30 000/yr don't charge tax at all. Works for me

I claim everything on my personal income taxes and it's all legal that way. Thankfully, my dad is a retired accountant, so he takes care of most of it for me. I just keep a spreadsheet of my income and expenses and he does the rest. Personally though, I wouldn't charge tax for balloons... the balloon is more of a material and you are charging for the service of twisting it.

I don't charge taxes as my earnings are below the cut. And it is best NOT to register for a tax number unless you HAVE to. Once you register you have to jump through hoops to prove you DON'T owe them!!

Oh my goodness...that is exactly how I feel about it. Before I got things switched to paying yearly they would send me a statement with the amount that they calculated I should have sold...I wasn't really selling anything at all. Thankfully, I finally talked to someone that allowed me to switch to yearly sales taxes. It WAS NOT AN EASY TASK. We just don't sell a lot of product like birthday store would.

At this point we don't really own a store front and I think that the small amount of "tangible" items are just not worth it. It would be better if they would allow you to just not collect tax until you made over a certain amount, the problem is that some wholesalers (local especially) will not sell to you without one. But I am finding that the internet has a lot of things available that do not require a sales tax number.

Our accountant said that many of the workers for the IRS don't even understand the laws themselves. So why complicate it so much? I vote for a simpler way to do things

I'll join you in voting for a more simple tax system. Sheesh, if the IRS doesn't understand it, how can anyone else expect to?

I purposely have not gotten into any sort of tangible products, even crazy hair pieces, because I do not want to deal with sales tax. Face painting is considered a non-taxable service in my area thankfully, so I simply pay income taxes annually along with my personal tax filings.

My father is an accountant. I just give him all my stuff and he takes care of it for me....lol