Author: Dona Basu

A California Resale Certificate Is One Of The Best Things You Can For Your Business

The average business in California will one day need to either accept or give a tax resale certificate. The process can often be confusing for even the savviest small business owners. That is why we at Tax Resale Certificate want to make sure that you understand this often confusing process.

What is A California Tax Resale Certificate?

It is critical that you understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail. It would be considered fraud not to pay sales tax on these items. In California, the State Board of Equalization, known as the BOE or the SBE, imposes sales tax on the sale at retail of tangible personal property.

If this is confusing for you, just think of tax resale certificates as state tax exemption certificates.  Some states actually call them exemption certificates or reseller’s permits. Purchasers who are engaged within the business of selling tangible personal estate may issue resale certificates when purchasing items they’re going to sell within the regular course of their business operations. When a seller accepts a legitimate resale certificate that is presented in good faith and during the proper time period, the seller does not owe tax on that sale. CDTFA-230, General Resale Certificate, is often issued by purchasers when purchasing goods they’re going to resell within the regular course of their business operations.

Generally, resale certificates are used:

• When purchasing finished items that are for resale.
• When buying materials which will become a physical part of an item that will be held for resale.
• When purchasing items which will be solely for demonstration or display while holding them for sale in the regular course of business operations.

Purchasers can not use a resale certificate when buying a product they will:

• Use rather than sell*,
• Use in their business before they sell it,
• Use for a personal purpose, or
• Hold as an investment for appreciation in value and for sale in the future.

Is The California Resale Certificate The Same As A Seller’s Permit?

Even though tax resale certificates are called reseller’s permits in some states, it is important not to confuse them with seller’s permits. A seller’s permit allows a retailer to charge tax on items that they are going to sell to a customer. A tax resale certificate allows you to buy items that are intended for resale without paying a sales tax on those items. Before a business starts selling products or providing taxable services, they must first get a California Seller’s Permit from the California Department of Tax & Fee Administration. The Seller’s Permit is sometimes referred to as a sales tax permit, sales tax number, or sales tax license.

Guidelines For California Resale Certificates

California as a state actually requires business owners to provide their own tax resale certificates. This can be printed in any type of formats such as a memorandum or a form letter. However, the following must be included in order for it to be accepted:

• The name and address of the purchaser.

• The purchaser’s seller’s permit number. If you aren’t required to carry a seller’s permit number, you’ll state that on the resale certificate and explain why. For instance, you’ll purchase products in California, buy sell them in other states where you don’t have nexus. Or you may purchase products that would require sales tax if sold individually but don’t call for it due to the way you use them. For example, you’ll purchase twine to use on your canned foods items, which you sell tax-free.

• A description of the product you are purchasing.

• A statement that the product is for resale or that it will be resold. The California Board of Equalization will only accept a statement containing these exact words. It will not accept statements that contain the words “nontaxable” or “exempt” instead.

• The date of the certificate, plus the signature of the purchaser or someone who can legally act in their place. The BOE will accept digital signatures as long as it’s unique to the person using it, it can be verified, it’s under the control of the person using it, it conforms to the Secretary of State regulations, and it’s “linked to data in such a manner that if the data are changed, the digital signature is invalidated.” In addition, the California Secretary of State provides a list of approved digital signature certification authorities.

• If you make multiple purchases from the same vendor, you can request that they keep your resale certificate on file rather than asking for a new one every time.

Does A Vendor Have To Accept My Tax Resale Certificate?

It is extremely important to a retailer’s bottom line that they do not pay sales taxes on goods if there is a possibility that the tax can be exempted on a state level. However, it is also crucial to understand that a wholesaler is not required to accept your tax resale certificate. If the vendor doesn’t accept the certificate, the buyer will have to pay the sales tax on the merchandise being purchased.  In most cases, they will be able to get credit for the sales taxes paid later on in their sales tax filing. 

If the seller is out-of-state, California is one of a few states that don’t recognize out-of-state resale certificates. In order to get tax-free from vendors in other states, the customer will need to register for a nuisance tax permit within the seller’s state.

That Is Why We Are Here To Help

It is understandable that all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

One of your first important decisions when starting a business is deciding what type of business entity best suits your needs. The business entity you choose can have serious consequences regarding liability and taxation. This article will help you better understand your options.

What is a business entity?

A business entity is a corporation created by one or more natural persons to hold on a trade or business.

The following are types of business entities:

• Sole proprietorship: Unincorporated business with one owner or jointly owned jointly owned by a marriage

• General partnership: Unincorporated business with two or more owners

• Limited partnership: Registered business composed of active, general partners and passive, limited partners

• Limited liability company: Registered business with limited liability for all members

• Professional limited liability company: LLC structure for professionals, like doctors and accountants

• C-corporation: Incorporated business composed of shareholders, directors, and officers

• S-corporation: An Incorporated business that is taxed as a pass-through entity

• Professional corporation: Corporate structure for professionals, such as doctors and accountants

• B-corporation: For-profit corporation that is certified for meeting social and environmental standards

• Nonprofit: Corporations: Formed primarily to benefit the public interest rather than earn a profit.

What is personal liability?

Personal liability means that your personal assets are exposed if one of your co-owners or employees commits an unlawful action that injures someone, such as writing a defamatory article or post. If there is a judgment against your company, it can be satisfied by reaching into your bank account, home, or automobile simply because of your status as an owner of the business.

Sole Proprietorship

If your business is going to be fairly small a sole proprietorship might be the right business entity for your needs. You, as the owner, will be in control of all business decisions and profits. You will also only be taxed one time on all business profits.

The greatest disadvantage of a sole proprietorship is that there is an unlimited liability. This means that you will be held personally responsible for all the business debts and losses.

This is great for the type of person who truly enjoys independence and wants to make their own rules without answering to others. You are your business and are okay with there being no formal division.

Partnership

A partnership is similar to a sole proprietorship except that there is more than one individual that owns the business. The liability of the partners for the debts of the business is unlimited. Each partner is ‘jointly and severally’ responsible for the partnership’s debts; that’s , each partner is responsible for their share of the partnership debts also as being liable for all the debts of the business. This means that you can be held responsible for your partner’s neglectful actions.

If you are someone who enjoys working with a team and does not want to shoulder all the responsibility for the business yourself, a partnership might work for you. If you have the right blend of personalities you can complement each other quite well and be stronger than any of the partners could ever be on their own.

Limited Partnership

A limited partnership contains two distinct types of partners:

• General Partners
• Limited Partners

The general partners run the day to day activities of the business. The general partners are also personally liable for a business’s debts and liabilities.

The limited partners do not have much to do with the way a business is run. They have limited liability concerning a business’s debts and they usually pay fewer taxes regarding the profit. The limited partners can be looked upon as silent investors.

If you want to retain primary authority in your business but definitely could use some other sources of cash than a limited partnership would be a great compromise.

C-Corporation

A C-corporation (c-corp) is when the business is considered separate from its owners and operators.  A c-corp consists of shareholders (the owners), a board of directors, and officers who have control over the corporation. One person can fulfill all these functions.

The great advantage of a c-corp is that the owner/owners are not personally liable for the debts and liabilities of the company. The disadvantage is that there is double taxation on profits. First, the corporation is taxed as a separate entity and then you are again taxed on the profits in your own personal taxes.

This is a great model for those who really want to start a business that is quite large in scope and size. However, you will be answerable to your shareholders for good and bad outcomes of your business decisions.

S-Corporation

If your corporation has fewer than 100 shareholders who are all individuals, not corporations; have only one class of stock, and be owned by U.S. citizens or resident aliens you could turn your business into an S-Corporation (s-corp).

An s corp is not subject to double taxation as a c corp is. That means that an s corp’s revenue is not taxed at the corporate level. It is only taxed when paying out as salaries or dividends to shareholders. An s-corp is often a better choice than a c-corp for most small businesses. 

It should also be noted that corporations have a lot of regulations regarding paperwork and documentation. This is not an entity for you if you want to be footloose and fancy-free.

Limited Liability Company (LLC)

Limited Liability Companies are extremely popular among many business owners because they often combine the best both worlds when it comes to liability and taxation.

These hybrids clear their owners of personal liability for the business’s debts or liabilities.

They also allow you to actually choose whether you want your LLC to be taxed as a partnership or as a corporation.

At the end of the day, you are the one who should decide what business entity best suits your needs. Make sure you consider important factors like taxation and liability. You should also go to your secretary of state’s website to find out what it takes to formally register your business.

If you are a retail business you should also be aware that resale certificates are also a great way to save on taxation. A retail certificate allows you not to pay sales tax on items that you plan to resell. Please read our article, Everything You Need to Know About Tax Resale Certificates to find out more. Then let the experts at our site guide you through this confusing process so your business can be as profitable as possible.

Tax Deductions For The Self-Employed Part 2

Welcome back as we continue our series on tax deductions that the self-employed can not afford to miss.

Home Office Expenses

Using part of your home for business allows you to deduct expenses for the business use of your home. This can be applied to all types of homes including business owners who rent.

If you use your home exclusively and regularly for conducting business you can deduct the following:

• Mortgage Interest
• Insurance

In order to qualify for the home office deduction, you must show that your home is used regularly and exclusively for conducting business and is the principal place of business.

There are two methods for calculating the house office deduction. In the standard method, you use Form 8829 to itemize the various expenses involved in using and maintaining your home office. This includes rent or mortgage interest payments, utilities, homeowners insurance premiums, and property taxes. In the simplified method, you determine the square footage of your home office (up to 300 square feet) and multiply by five dollars.

The simplified method is more straightforward but you should see which one gives you a larger deduction amount.

Office Expenses

We should point out that office expenses are not the same as home office expenses. Office expenses should include things such as maintenance, cleaning, and repair. This is mostly if you use a dedicated office for your business and not a home office.

Interest

We have already mentioned being able to deduct mortgage payment interest. If you’ve got a mortgage on a property that’s primarily used for your business (that is, not your primary home), you’ll write off the interest thereon mortgage. You’ll need to get a Form 1098 from the lender to report the interest paid therein year.

The second category includes all other sorts of interest. Examples are business credit cards, lines of credit, or interest on equipment loans.

Professional Services

A self-employed person can deduct fees paid to licensed professionals like attorneys and accountants, as long as some of the services are done in furtherance of your business. Just make sure you separate the business and personal fees.

Licenses And Certifications

You can deduct any expenses associated with business licenses, certifications, and regulatory fees related directly to your business. This can include incorporation fees and small business licenses for your state.

Rent Or Leasing Payments

If you rent office space, cars, or any physical equipment for your business, all those expenses are deductible.

If you leased your car for a term of 30 days or more, though, you’ll need to reduce the deduction by an “inclusion amount.” For more information, refer to the “Leasing a Car” section in chapter 4 of Pub. 463.

Repairs and maintenance

This category includes incidental repairs and maintenance made to machines and other property. For example, you can deduct costs for painting your office or fixing your broken computer.

Educational Expenses

Any expenses that are work-related education expenses can be deducted.

To be deductible, your expenses must be for education that:

(1) Maintains or improves your job skills or

(2) The law requires you to keep your status or occupation. 

However, albeit the education meets either of those tests, the education cannot be a part of a program that will qualify you for a replacement trade or business or that you got to meet the minimal educational requirements of your trade or business.

Expenses that you can deduct include:

• Tuition, books, supplies, lab fees, and similar items
• Certain transportation and travel costs, and
• Other educational expenses, like the value of research and typing

Supplies

Incidental office supplies such as paper, pens, and clips can be deducted from your taxes. However, if the supplies are consumable, such as plastic needed to produce a product, you are limited to only deducting the amount that you use for the tax year, not the total amount that you purchased.

Employee Retention Tax Credit

This credit was designed to help companies retain employees while facing pandemic hardships. Businesses will be eligible for this credit if operations were fully or partially suspended due to the coronavirus shutdown. You can also be eligible if gross receipts for your company went down more than 50 percent compared to the same time period in the previous year.

Businesses that are eligible can get a refundable 50% tax credit on wages with a maximum of $10,000 per employee. The credit can be obtained on wages paid or incurred from March 13, 2020, through December 31, 2020.

Employers will need to report total qualified wages and related health insurance expenses on their quarterly tax returns on Form 941. This needs to be done in the second quarter of 2020. The Employee Retentions tax credit can be taken against the employer’s share of Social Security taxes.

Family And Sick Leave

Employers will be 100 percent reimbursed for providing sick and paid family leave to employees for reasons related to the Coronavirus, by a tax credit. This will be paid every quarter. Employers will also be able to hold on to their portion of payroll taxes to be deposited and use this money to pay for the sick and family leave. There will be no penalty for businesses that do not deposit payroll taxes because they were anticipating a tax credit.

Let Us Handle The Hassle Of A Tax Resale Certificate

During these tough times, it is nice if someone takes a frustrating but beneficial task off your plate. That is why, here at Tax Resale Certificate, we handle all the headaches of registering for a tax resale certificate for you.

At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

We provide a tax resale certificate for the top states that include:

• California
• Texas
• Massachusetts
• New York
• New Jersey
• Illinois
• Florida

We know that there is a lot of confusion in the world right now. Luckily, these tax credits will help ease some of the burdens. A tax resale certificate is a fantastic way to make sure your business is in great shape to take advantage of consumer demand once the dust settles. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. 

The American business landscape is rapidly changing. Many people are turning to self-employment as a means of earning income and doing something that they love. There is a great opportunity today for someone to be their own boss and start a company even if they do not have a great deal of money. However, being self-employed can be quite challenging when it comes to taxes. That is why we have composed a listing of tax deductions that smart self-employed people can not afford to miss.

Starting Up

Even though starting up a business is easier than ever before, there are still costs associated with any new venture. Luckily, You can deduct up to $5,000 of all the costs related to starting a new business if your business was started this tax year. This can include things like market research and advertising for your business launch. 

Insurance

A self-employed person can deduct the premium of various types of business insurance. This can include:

• Fire
• Theft
• Worker’s Compensation
• General Liability

Vehicle Expenses

So, if a self-employed person uses their vehicle for 100 percent business use and the vehicle is in the company’s name, then the car or truck is fully deductible.

If the vehicle is in your personal name and used partly for personal, partly for business use, then there are two ways to calculate the deductions

Track your actual car expenses, including gas, maintenance, insurance, and depreciation, and deduct a percentage supported the amount of business miles you drive.

Deduct a typical rate on each “business” mile driven for the year. For 2020, the quality mileage rate is 57.5 center per mile driven for business use, down from 58 cents per mile in 2019.

No matter which method you select, you’ll got to keep track of what percentage business and private miles you drive. You can use a manual log or an online app.

If you have a fleet of business vehicles, which is usually five or more, you must use the actual expense method.

Mileage

The Internal Revenue Service allows you to deduct mileage that is used for business purposes.

They are as follows:

• 58 cents per mile for business miles driven, up from 54.5 cents for 2018
• 20 cents per mile driven for medical or moving purposes, up from 18 cents for 2018
• 14 cents per mile driven in service of charitable organizations, unchanged from 2018

Remember to add all business parking fees and tolls paid during the year, as these are deductible too.

Business Travel Expenses

The Internal Revenue Service defines a business expense as the ordinary and necessary expenses associated with traveling away from your home for your business, profession, or job. These expenses cannot be extravagant or used for personal purposes.

The following are valid business expenses:

• Travel by airplane, train, bus, or car between your home and your business destination. (If you’re provided with a ticket or you’re riding free as a result of a frequent traveler or similar program, your cost is zero.)
• Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel, and the work location, and from one customer to another, or from one place of business to another.
• Shipping of baggage, and sample or display material between your regular and temporary work locations.
• Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
• Meals and lodging.
• Dry cleaning and laundry.
• Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
• Tips you pay for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees, and operating and maintaining a house trailer.)

Advertising

Self-Employed people should keep in mind that all advertising costs are fully tax-deductible.

This can include the following

• The cost of printing business cards, flyers, and mailers
• Social media advertising like Facebook ads
• Promotions at conventions and trade shows
• The cost of advertising agencies
• Television and radio advertising
• Employing freelancers

You can also deduct all commissions paid to non-employees for sales and marketing purposes. This can include payments to individual sales reps, or marketing channels and a platform like Amazon.

Any Labor That is Contracted

This includes all fees paid to independent contractors. If you hired a graphic designer to style a logo for you or contracted with a developer to make your website, their fees are fully tax-deductible.

If you paid a contractor $600 or more over the course of the year, you’ll even have to file Form 1099-MISC.

Depreciation

If you have a business asset that is expected to last more than one year, you can depreciate the cost of the asset over its life rather than deducting the cost of the asset the year that you purchase it. Depreciation is fully deductible. Examples of assets that can be depreciated are:

• Cars
• Furniture
• Technology like computers
• Improvements to leased property

You can not include inventories, stock-in-trade, and land cannot be as a depreciated tax deduction.

Employee benefits

If you have employees and provide health insurance and other benefits then you can fully deduct the costs of those benefits.

This Is Just the Tip of the Iceberg

Join us for the second part of this series to find out about even more fantastic tax deductions for the self-employed.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

As a self-employed person, getting a tax resale certificate can really save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

It Is Never Too Early To Plan For Taxes

It is true that 2020 was a year that had a lot of personal challenges for small businesses. However, understanding your tax liability for the coming year is always a good idea and it is never too early to start. There is no reason that taxes need to be a mystery and you can forecast what you will owe in the coming year.

Become Proactive

Business taxes are determined by net income. This is when you subtract business expenses from gross revenues. Having an online accounting system automatically keeps track of your figures. If you use an online accounting system and you’ve entered all income and expenses, the system will automatically provide you with a gross profit figure.  Those that use spreadsheets, please take the time to add up the numbers so you can forecast what you will need to owe in taxes for the following year.

Is Your Business a Pass-Through Entity?

A pass-through entity is when the tax liability of the business actually passes through to the owner.

Pass-through entities include:

• Sole Proprietorships
• Limited Liability Companies
• S Corporations

A business that has not filed any paperwork is automatically considered a sole proprietorship by the Internal Revenue Service.

If you are a pass-through entity then you could owe less in taxes. The Tax Cuts and Jobs Act allows a 20 percent tax deduction on qualified business income from pass-through businesses. Generally, the deduction is available to eligible taxpayers whose taxable income is below $315,000 for joint returns and $157,500 for individual filers, according to the IRS. Some types of pass-through businesses may not qualify for this deduction: The IRS regulations detail the limitations.

If your business is a pass-through entity, then the taxable business income must be reported with your personal tax return. This means the amount you owe will be determined by your personal tax bracket. For 2020, personal tax brackets range from 10 percent (for individuals earning up to $9,875 and joint filers earning up to $19,750) to 37 percent for individuals earning more than $518,400 and joint filers earning more than $622,050.

If Your Business Is A C-Corporation

A business that is not a pass-through entity is a C-corporation. These are usually larger companies that do not qualify as small businesses.  However, if your business is a c-corporations it will now be taxed at a flat rate of 21 percent. Remember that c-corporations are always taxed twice. That is because the c-corporation itself is looked upon as a separate entity. These entities are taxed at the business level and the shareholder level.

There Are Other Taxes Besides Income Taxes

Businesses pay more than just income taxes. They include the following:

• Employment taxes on wages paid to employees and to the owner (you). 
• Social Security
• Medicare tax 
• Federal unemployment tax (FUTA)

Social Security tax is 12.4 percent of all wages paid up to $137,700, with half paid by the employee and half paid by the employer. Medicare is equal to 2.9 percent of wages paid (3.8% on wages in excess of $200,000 ($250,000 for joint returns, $125,000 for married taxpayers filing a separate return), half paid by the employee, and half paid by the employer. FUTA is generally equal to 6 percent of the first $7,000 of each employee’s wages and is paid by the employer. Self Employed owners will have to pay a total amount of Social Security taxes and Medicare taxes since there is not a separate employer to pay it for you.

Remember The Deductions

Read our helpful article on deductions that your small business can not afford to miss.  It includes the following:

• Travel by airplane, train, bus, or car between your home and your business destination. (If you’re provided with a ticket or you’re riding free as a result of a frequent traveler or similar program, your cost is zero.)
• Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel, and the work location, and from one customer to another, or from one place of business to another.
• Shipping of baggage, and sample or display material between your regular and temporary work locations.
• Using your car while at your business destination. You can deduct actual expenses or the standard mileage rate, as well as business-related tolls and parking fees. If you rent a car, you can deduct only the business-use portion for the expenses.
• Meals and lodging.
• Dry cleaning and laundry.
• Business calls while on your business trip. (This includes business communications by fax machine or other communication devices.)
• Tips you pay for services related to any of these expenses.
• Other similar ordinary and necessary expenses related to your business travel. (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees, and operating and maintaining a house trailer.)
• Many apps have come on the market that makes it exceptionally easy to scan and track receipts for travel-related expenses. Some of these apps also automatically categorize expenses which is very nice for accurate bookkeeping.

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can really save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

The Buzz

You have probably heard about a lot of buzz words like e-commerce and POD. You have this vague feeling that other people are making good money on these buzz words and you want to join the party. Tax Resale Certificates are an excellent way to make the most out of your e-commerce business.

What is E-commerce?

E-commerce simply refers to the buying and selling of goods and services on the internet and the data transactions that constitute payment. Brick and mortar stores are no longer the go-to for shopping as more people are going online for their retail needs.

How much money is in E-commerce?

Online shopping has been around for over 25 years and is expected to grow into a 4 trillion dollar industry. It is by far the fastest-growing retail market.

What is POD?

POD stands for print on demand. POD is a printing technology and business process in which designs are not printed until the company receives an order, allowing prints of single or small quantities. 

What is the advantage of POD?

This is an industry that has grown leaps and bounds because of digital printing technology. Before it only made sense to print in bulk because of the relatively high cost of small scale printing. Now, a business can make great margins on printing products just based on customer demand. This means that you no longer have to order in bulk and sit on a bunch of unsold inventory.

What does this mean for me as a budding entrepreneur?

Print on demand is providing an amazing opportunity for people to start their own businesses online without having to provide any capital upfront. This means there is little risk for what could be very lucrative rewards. You offer a selection of designs that can be printed on various items such as t-shirts, hoodies, pullovers, and pop sockets.

How do I get started?

One of the most popular platforms from print on demand is Merch by Amazon. You will first need to apply and be accepted to create an account. Because of the enormous popularity of the program, it was not unusual for people to wait months before they got a confirmation. The way you create an account is by requesting an invitation from Amazon. After you request an invitation and sending a letter about yourself, Amazon will review your invitation and accept or reject your application. The process can take up to 6 months to be approved. It is hard to wait for an invitation but the good news is that you can spend that time researching so you will be ready to go once Amazon approves your request.

Follow these steps:

• Get Your Account
• Make a Gameplan.
• Recognizing Merch T-Shirts.
• Understanding Amazon Best Sellers Rank.
• Check the Competition.
• Creating Your First T-Shirt

Amazon has the following tiers:

• Tier 1: 10 designs.
• Tier 2: 25 designs
• Tier 3: 100 Designs
• Tier 5: 500 Designs
• Tier 6: 1000 Designs
• Tier 7: 2000 Designs
• and goes on… up to 16,000 or more…

The truth of the matter is many people have actually turned this print on demand-side hustle into a lucrative money-making business that pays more than many full-time gigs.  In fact, a Merch by Amazon business actually sold for almost six figures in as little as 19 days!

What Is A Tax Resale Certificate

A tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell.

What Is Sales Tax Nexus?

Nexus is defined as having a presence or a significant connection to a state. Your sales tax obligations as an online store owner vary. Most of the time, however, a mere economic connection to a state is enough to create nexus.

State connections include:

• Having offices in the state
• Warehouses and distributors located in the state  
• Employees
• Affiliates located in the state
• Making a certain amount of money or transactions in a state 
• Doing physical business in a state for some time 

Here are some examples of other connections to a state that could result in sales tax:

• Click-Through Nexus legislation- This usually requires a remote seller to meet a minimum sales requirement in the state resulting from an in-state referral agent who is a resident of the state. The agent must be making commission payments to the referral agent for any sales that are the result of the click-through referrals from the agent’s website. 

• Affiliate Nexus legislation– A remote retailers hold a substantial interest or are owned by a retailer that is located within the state and sells a similar type of product under a similar business name. Instate retailers can also be used to promote or market the product to in-state customers. Affiliate nexus does not require common ownership and may not include services such as sales and delivery.

• Marketplace Nexus legislation– This definition applies to marketplace facilitators who operate a business in the state and provides e-commerce infrastructure, customer service, payment processing, and marketing services to individual sellers. The facilitator is the one that is required to register with the state and collect the sales tax rather than the individual sellers.

• Economic Nexus– An out-of-state retailer generally is required to collect and remit sales tax once the retailer meets a set level of sales transactions or gross receipts activity (a threshold) within the state. No physical presence is required.

Do All States Charge Sales tax?

There are also states that do not charge sales tax. Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge sales tax on a state level. Alaska and Montana do allow municipalities to charge sales tax on retail goods at a local level. A tax retail certificate is not needed in these places with regard to a state sales tax.

Tax Resale Certificate Is Here To Help

Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. This way you can completely focus on the great opportunities presented by your Print on Demand business.

What is Drop Shipping?

Dropshipping is a fulfillment method where the selling merchant does not stock or own inventory. When a customer buys a product, the seller purchases the item from a third party. The third party is usually a wholesaler or manufacturer who then ships the product directly to the customer. In dropshipping scenarios, the seller does not handle the product directly. This is a particularly popular form of e-commerce.

What is E-commerce?

E-commerce simply refers to the buying and selling of goods and services on the internet and the data transactions that constitute payment. Brick and mortar stores are no longer the go-to for shopping as more people are going online for their retail needs.

How much money is in E-commerce?

Online shopping has been around for over 25 years and is expected to grow into a 4 trillion dollar industry. It is by far the fastest-growing retail market.

Dropshipping Can Make Sales Tax Complicated

Dropshipping is a new and innovative way of doing business. This is very exciting but also comes with unique operational challenges. This is particularly true when it comes to figuring out relatively simple things like sales tax.

In a traditional brick and mortar sales environment, sales tax is rather straightforward. Customers are usually making purchases from their stores and the retailer collects the sales tax from these purchases at the checkout. This is all happening in the same state in one location, so there is little confusion.

With drop shipping, the retailer could be in Kansas, while the order is forwarded to a supplier in Delaware and then shipped to a customer in Tennessee. This makes it confusing about who charges the sales tax and to exactly what state sales tax is owed.

Nexus

Nexus is defined as having a presence or a significant connection to a state. Your sales tax obligations can change significantly depending on the state. Most of the time, however, a mere economic connection to a state is enough to create nexus.

State connections include:

• Having offices in the state
• Warehouses and distributors located in the state  
• Employees
• Affiliates located in the state
• Making a certain amount of money or transactions in a state 
• Doing physical business in a state for some time 

Nexus Can Change Depending On The State

Nexus requirements for dropshipping can vary greatly depending on the state.

In the following states, nexus is created just by any drop shipping connection:

• Texas
• Florida
• California
• New York

In other states, dropshipping nexus is created by spending a minimum amount of dollars.

Tax Scenarios For Drop Shipping

Neither the retailers nor the suppliers have nexus:

• Retailers and suppliers are generally not required to collect sales tax.
• The customer is required to pay use tax on the purchase (unless it is tax-exempt).

Nexus for the retailer but not the supplier:

• The retailer must collect sales tax from the customer.

The supplier has nexus but not the retailer:

• The supplier might be responsible for collecting either sales tax or proper documentation (such as a resale certificate) from the retailer.
• The sales tax might be taken from the wholesale price or subject to a predetermined formula if the exact price is unknown.

The Various State Tax Laws Can Be Confusing

Dropshippers must understand that each state has its own unique tax laws related to retail sales tax that are constantly changing. There are many different definitions of what is nexus and what manner of tax resale certificates are acceptable. Some states accept resale documentation from other states, while many do not.

Third-party fulfillment companies make this even more difficult to comprehend.  A large company like Amazon can have one shipment travel through a dozen states, which can often trigger nexus.

Do Not Be Caught Unaware

Many dropshipping third party suppliers are being unpleasantly surprised by large fines and hefty audits. This has made them require retailers to pay sales tax or be able to present valid tax resale certificates. However, the type of documentation required for each state can vary greatly.

Do Not Get Frustrated.

We understand that this is a whirlwind of information that can be very frustrating. There are great differences between states and you do not have the time to sort out this out and properly run your business. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

What is A Tax Resale Certificate?

It is critical that you understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this is confusing for you, just think of tax resale certificates as state tax exemption certificates.  Some states actually call them exemption certificates or reseller’s permits.

That Is Why We Are Here To Help

It is understandable that all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

We provide a tax resale certificate for the top states that include:

• California
• Texas
• Massachusets
• New York
• New Jersey
• Illinois
• Florida

Let us handle the hassle so you can go about the important work of leading your retail business to great success. 

How to Start Your Online Retail Business

The internet has opened up new opportunities for many people. It is a vast marketplace that can be a goldmine for enterprising and smart business people. The numbers are very promising.

In 2017, e-commerce was responsible for around $2.3 trillion in sales and is expected to hit $4.5 trillion by 2025. In the US alone, e-commerce represents almost 10% of retail sales and that number is expected to grow by nearly 15% each year.

It is tempting to want to jump into this very lucrative market, but how do you begin?

Always start with a business plan.

A business plan is a strategy that lays out all the important aspects of your company including goals, financing, and operations. Many online retailers mistake a lack of brick and mortar overhead as an excuse for not planning out the details of their business properly. In order for your online retail business to be taken seriously, you must treat it as a serious business.

Think of it this way, a good business plan should tell anyone who reads all the essential details of your company. 

A solid business plan should contain some elements of the following:

• Executive Summary
• Company (who we are)
• Products and Services (what we sell)
• Market Analysis (who we sell to)
• Strategy (how we sell, who the competition is, what the roadmap is)
• Operations (how it is made)
• Financial Plan (what are the funding requirements, what is the expected return on investment)

A good business plan often makes a critical difference between failure and success. It provides a clear pathway on which your online retail business can navigate

Choosing the appropriate business structure and why it matters.

The type of business structure you choose has a great impact on very important matters like taxation and liability. You can choose from the following:

• Sole Proprietorships
• Partnerships
• Corporations
• S Corporations
• Limited Liability Company (LLC)

Carefully research what is the best fit for your online retail business model. Each structure has its own pros and cons and makes sure you know what is right for you. Most online businesses are Limited Liability Companies as they often offer the liability protections of corporations without the personal liabilities of a partnership or sole proprietorship.

Decide what state that you want to form your business.

Most new online business retailers file their documents within the state that they are physically located. This helps avoid the cost of hiring an out of state registered agent in your home state. However, if your business is large in scope you might want to file your documents in Delaware. This state has advantages like laws that are generally favorable to businesses, and, unlike other states, it has a separate Court of Chancery that hears cases involving corporate law. It also does not collect corporate taxes if your Delaware Corporation actually does business in another state.

Build your inventory and make sure you get bar codes for all of your products.

To legally sell products to consumers through an online store, you will need UPC bar codes for each item you are selling, with separate bar codes for different patterns, styles, and combination of features. You can purchase barcodes easily online. 

Make sure you have a decent size inventory to handle the demand. Online customer expects their orders to come through quickly.

Set up your Domain and design a great website.

Your domain name is your internet address. You want your domain name to be memorable and interesting. Many companies offer domain name registration. Set up an account and then you identify the name of your domain.  There is usually an annual fee

You also want to design a pleasing website that offers customers a pleasing and simple to use interface. This includes setting up the theme, headers, and product lines. You will also need to organize your products into categories, and decide whether you want to include sections such as a FAQ page or blog. Do not forget important factors like a shopping cart and easy to pay options. This should not be difficult if you are using a typical e-commerce platform. You also want to make sure to constantly update and check your website to make sure there is no technical issue that could interfere with your sales.

Remember to get a Tax Resale Certificate.

As a savvy online business retailer, it is important that you are aware of how to utilize tax resale certificates to your best advantage. In short, a retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell such as wood for a cabinet. This is a significant saving and can save your business a ton of money if utilized properly. Our article Everything You Need to Know About Tax Resale Certificates will give you an in-depth rundown about how these types of certificates can help your business.

Unfortunately, the rules of Tax Resale Certificates can vary greatly by the state which can be very confusing. Our site makes the process as easy as possible. Just take advantage of these user-friendly options to help take the headache of applying for a tax resale certificate off your plate.

Launching and Marketing

Once you have worked out all the operational and technicals bugs it is time to launch your new online retail business. Make sure that you market to your customers on multi-levels including taking advantage of many types of social media. You should also be aware of search engine optimization to make sure that your customers can find you easily. It is a good idea to maintain an ongoing flow of content on the site to both attract and engage your core market.

You have now entered the lucrative world of online retail. Your careful planning has put you ahead of the game in regards to your competitors. Just remember that business is dynamic and you must always be proactive in improving your products and services.

As the employment landscape changes more and more people are going into business for themselves. Entrepreneurship has long been a symbol of American ingenuity and independence.

However, many people are often overwhelmed when faced with all the challenges of running their own business. It is why the SBA estimates that almost 30% of new businesses fail during the first year and 66% during the first ten years of life.

One of the reasons so many businesses do not make it is because of their leaders not fully utilizing all business opportunities that are available to them. 

Sure there is a ton of information available online about what you should or should not do when trying to navigate the business landscape. We will focus on some commonly missed business opportunities that can have a giant effect on your business’s bottom line.

What is a missed business opportunity?

This might seem like the most basic of questions. However, for this article, we are going to define the missed business opportunity in the following manner:

• Failure to enter or utilize a marketplace for the best results as associated with the business goals.

• Failure to take advantage of a tax break that would have been lucrative for the business’s profit margin. 

Lets first explore how many small businesses miss marketplace opportunities and how some of these common mistakes can be avoided.

They underestimate the power of being proactive.

There are many ways to earn a great passive income online and sites like these can help you bring in that extra chunk of change with very little investment.

However, if you are running a small business that you want to become your main source of income, you have to actively pursue an opportunity at every turn.

It is not enough just to let social media do all the work for you. It is still important to make personal connections and make sure your business is an appreciated member of the community.

Go to meetups and networking meetings.

Not only can these events be a lot of fun but they can also be a great way to make important contacts that can help you move your business forward.

Allow the networking to organically grow into speaking opportunities.

Did you know that 26.2 percent of the leads generated for professional services firms come from speaking engagements (second only to referrals/recommendations at 26.9 percent)?

Speaking engagements are a great way to showcase your business’s expertise and get your message out into the community. The leads generated from a speaking engagement can be invaluable in terms of marketing and social media strategy. It helps define your audience as well as promote respectability for your brand.

Understanding how to utilize cause marketing. 

Is there a cause that you are passionate about and that aligns well with your company goals and world view?  It is important for a business in day and age to communicate that they have an altruistic attitude and have intentions that go beyond just making money.

This is not limited to cash donations since many new small businesses do not always have giant budgets. A business can help with a drive that donates backpacks and school supplies for underprivileged children in the community. Think about creative ways in which you can incorporate charity and make your name stand out from other sponsors.

Sign up for the SAM Directory.

Many new businesses miss very lucrative opportunities with the federal government by not registering in the SAM Directory.

SAM stands for System Award Management.

In order to do any business with the federal government, you must register your business in the System for Award Management. The government will not hire any type of business large or small that has not registered in SAM.

A business also has to be registered with SAM before they can begin to apply for valuable federal grants.

A grant is a way the government supports your business by providing funds. Grants support economic initiatives and many other programs listed in the Catalog of Federal Domestic Assistance (CFDA).

This website can help guide you through the confusion of SAM registration so you can qualify for valuable government contracts and grants as soon as possible.

Do not forget tax deductions and how important they are for your bottom line.

We have talked about making the most of marketplace opportunities but a lot of small businesses lose unneeded money because they do not understand how much they can save on smart tax deductions.

Cellphones

You can deduct your percentage of business use from your cell phone bill on your taxes. For example, if you use 30 percent of your personal cell phone for business, then you can deduct 30 percent of the bill. 

You can also just purchase a cell phone that will just be used for business purposes.

Equipment and Furniture

Section 179 is a provision in tax law that enables business owners to deduct the full purchase price of qualified equipment from their gross income. Rather than deducting a certain percentage of the equipment under a multi-year depreciation schedule, as is customarily done, business owners can deduct the full price, as long as they limit expenditures to a spending cap of $2.5 million if it was financed or purchased in 2018.

Qualified assets for Section 179 include:

•    Machines or equipment purchased for business use.
•    Office furniture.
•    SUVs, pickups, and vans weighing more than 6,000 pounds.
•    Certain improvements to the interior of commercial property.

Tax Resale Certificates

A tax resale certificate is a signed document that indicates that the purchaser intends to resell the goods. In some states, resale certificates are also used to purchase taxable services that become a part of the property for resale.

Tax resale certificates can provide great savings that are fantastic for a business’s bottom line. However, the rules and regulations can vary greatly by the state which may cause a lot of confusion. Luckily there are websites that take the headache out of the process. 

Read our handy article Tax Deductions that Every Small Business Owner Should Know to find out about more money-saving tax deductions.