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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7434
Experience:  15years with H & R Block. Divisional leader, Instructor
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I am starting my own in-home quilting business. I am a sole

Resolved Question:

I am starting my own in-home quilting business. I am a sole proprietor and have applied for a sales and use tax ID number from the state of Minnesota for buying my products like thread and batting wholesale. Do I need a federal tax ID number as well? How much tax do I charge a customer? Do I charge them tax on just what I bought and used on their quilt like the thread and batting or on the actual labor cost as well?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
You are not required to have the Federal EIN and you can use your SSN on your Schedule C. If you wish to obtain a Federal EIN you can go ahead and obtain it now.

Robin D. :

You would charge sales tax on the cost of the finished item in whole.

Robin D. :

Minnesota has a publication for sales tax which is easy to read and you would most likely benefit from having it in yoru files:
http://www.revenue.state.mn.us/Forms_and_Instructions/sales_tax_booklet.pdf

Robin D. :

Here is the link to the Federal EIN page
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online

You may decide to go ahead and apply

Robin D. :

Starting a new business is an exciting venture, I wish you all the best.

Robin D. :

My goal is to give you excellent service. If you are satisfied, please rate me. If you have follow-up questions on this same topic, use the reply box below. To start a new conversation with me on a new topic request me again.


 

Robin D. :

Did you have any other questions about your new business?

Customer:

What is the sales tax that I charge to customers?

Customer:

Also, I paid $30,000 for the quilting machine. Can I deduct that on my personal tax return as a deduction?

Robin D. :

Minnesota has a 6.875 percent generalsales
tax rate.(The rate increased from 6.5 percentto 6.875 percent, effective July 1, 2009.)

Robin D. :

Yes

Robin D. :

The machine will be depreciated and you will get a percentage each year for it's life

Customer:

Great. Besides that 6.875% are there local taxes a need to charge for? How do I find that out?

Robin D. :

Let me get you the calculator.................

Customer:

Thanks for all your help - you answered all my questions.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7434
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 5 other Tax Specialists are ready to help you

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