07-28-2007, 06:05 AM
[quote davester]It's very likely that she'll move enough money to attract the attention of the IRS, so we definitely have to do this as a sole proprietorship.
If she's doing more than about $30k/yr gross, she should consider a corporation and not a sole proprietorship. The tax savings will more than pay for a good accountant to do the work for you.
As far as CA sales tax goes, wish I could help you more. CA is quite a mess when it comes to sales tax. My suggestion would be to find an accountant in you area as local sales taxes also come into play. It might be too late to avoid tax on the frames. I know in WA the sales tax laws are more simple, but I still wouldn't want to deal with them on my own. For example, although I don't have to pay sales tax (~9.5%) on stuff I use in the manufacture of goods, I do pay it because if I don't I have to pay B&O tax which is an 8% tax on the gross sales. So if materials cost me $100, and I sell it for $1000, I pay $9.50 instead of $80.
I've also been digging through lots of tax issues for the past few months as I'm starting another business. I'm learning lots of new stuff about taxes. My favorite is that there are a ton of taxes on the books that the state doesn't collect. But whenever there's a budget shortfall, they search the books, find those taxes and collect on the past four years plus penalties imposed. It's up to me to pay them, even if they're not collecting them.
If she's doing more than about $30k/yr gross, she should consider a corporation and not a sole proprietorship. The tax savings will more than pay for a good accountant to do the work for you.
As far as CA sales tax goes, wish I could help you more. CA is quite a mess when it comes to sales tax. My suggestion would be to find an accountant in you area as local sales taxes also come into play. It might be too late to avoid tax on the frames. I know in WA the sales tax laws are more simple, but I still wouldn't want to deal with them on my own. For example, although I don't have to pay sales tax (~9.5%) on stuff I use in the manufacture of goods, I do pay it because if I don't I have to pay B&O tax which is an 8% tax on the gross sales. So if materials cost me $100, and I sell it for $1000, I pay $9.50 instead of $80.
I've also been digging through lots of tax issues for the past few months as I'm starting another business. I'm learning lots of new stuff about taxes. My favorite is that there are a ton of taxes on the books that the state doesn't collect. But whenever there's a budget shortfall, they search the books, find those taxes and collect on the past four years plus penalties imposed. It's up to me to pay them, even if they're not collecting them.