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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28086
Experience:  Taxes, Immigration, Labor Relations
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I have a small business and have been intending to donate 20%

Resolved Question:

I have a small business and have been intending to donate 20% of the procedes of each sale to a charitable organization. The product I sell has MN state sales tax on it- do I calculate the sales tax based on the price before or after the donation? For example on a 100$ item, $ 20 to donation and 80$ to my company: is the sales tax based on the 100 total or the 80 I would keep?
Submitted: 8 years ago.
Category: Tax
Expert:  Lev replied 8 years ago.

You will calculate the sale tax based strictly on a selling price and will list it in the invoice separately.

Your donation will not affect the calculation of the sales tax.

 

Please let me know if any clarification is needed.

 

 

Customer: replied 8 years ago.

I guess I am still confused- the selling price = 100$, so if I am understanding you correctly I would add 6.70$ to the bill for sales tax.

When I report my earnings to the state would I report 100$ or 80$, as 20$ has already gone to the charity?

Expert:  Lev replied 8 years ago.

that is correct - if the selling price = 100$ ans sales tax rate 6.7% - you would add 6.70$ to the bill for sales tax.

Your will report gross proceeds $100

than you will calculate your expenses and net profit.

 

Donation deductions are reported separately and would not affect the calculation of the business profit..

 

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