07-28-2007, 06:17 PM
It is very important that financial matters be handled cleanly. Otherwise misunderstandings can end with unhappiness all around. This is one of the reasons why people are advised to avoid doing business with friends -- the fact that you trust each other can cause you to neglect details that really MUST be spelled out.
The best thing you can do is to show your friends how to set up to collect sales tax properly. Direct them to an accountant. Get the forms, help THEM to fill them out, and make sure THEY file them with the state. If necessary, help THEM to forward the taxes to the state. Give them this help because they are just setting up and they are your friends. However, if they continue to need this level of help for their second show, don't do further business through them until they understand what they are doing.
If the gallery owners end up collecting the money on your behalf and YOU are forwarding the sales tax to the state, then all payments by check and credit card should be made out to YOU. If you will be taking credit cards, then you will need to find a way to accept credit card payments as well. After YOU have deposited all the proceeds, you will then pay the gallery owners their commission, which you will take as a business expense. Whatever you do, make sure that your contract with them is very clear and written out.
If the payments are made out to the gallery, but YOU have the tax ID and pay the sales tax, the state will probably be unhappy with both of you.
I have dealt with products sales for my Tai Chi school for several years now. We have branches in several states, summer camps administered under joint auspices, etc, and we are all friends. Nevertheless, things can get murky very quickly unless we are careful to spell everything out.
I hope this helps.
Janit
The best thing you can do is to show your friends how to set up to collect sales tax properly. Direct them to an accountant. Get the forms, help THEM to fill them out, and make sure THEY file them with the state. If necessary, help THEM to forward the taxes to the state. Give them this help because they are just setting up and they are your friends. However, if they continue to need this level of help for their second show, don't do further business through them until they understand what they are doing.
If the gallery owners end up collecting the money on your behalf and YOU are forwarding the sales tax to the state, then all payments by check and credit card should be made out to YOU. If you will be taking credit cards, then you will need to find a way to accept credit card payments as well. After YOU have deposited all the proceeds, you will then pay the gallery owners their commission, which you will take as a business expense. Whatever you do, make sure that your contract with them is very clear and written out.
If the payments are made out to the gallery, but YOU have the tax ID and pay the sales tax, the state will probably be unhappy with both of you.
I have dealt with products sales for my Tai Chi school for several years now. We have branches in several states, summer camps administered under joint auspices, etc, and we are all friends. Nevertheless, things can get murky very quickly unless we are careful to spell everything out.
I hope this helps.
Janit