We at Prestige Auditors heard that you’re looking for information on sales tax! Are you? Well, you’ve come to the right place.
We’ve got all the information you could ever need about sales tax, and that’s just a small portion of what we have in our Info Bag!
Without too much nosing around, let’s get right to it:
What is Sales Tax?
Consumer society is based on buying and selling, and both are subject to tax. This time, we’re going to focus on sales tax, which is known as a type of “consumer tax.”
To put things simply, sales tax is a tax which you pay to whatever form of authority (such as a government) whenever you buy something. That something could be a physical product (like pretty much every product) or a service (like a tutorial, seminar, etc.). If you’re a seller of a product or a service, you are required by the law to collect that from your end consumers, whenever a sale is made.
Well, it is in theory.
By the way, sales tax is also referred to as conventional sales tax or a retail sales tax.
Does Everyone Pay Sales Tax?
Yes, and no. If a seller sells a product to an end consumer, the end consumer will be charged with sales tax at what is known as “the point of purchase.” However, if the buyer of the product is not an end consumer but is instead planning on reselling whatever it is they are buying, then they are not charged sales tax.
Let’s simplify things even more. The first example:
- Seller is a pet food supplier. You are a buyer who is an end consumer. This means that when you buy a can of let’s say dog food, you’re not going to sell that can of dog food after you buy it. It’s going to go in your dog’s belly. That makes you an end consumer, and you will be charged sales tax by the seller.
- The same seller sells you dog food, but this time you’re not the end consumer. Instead, you’re going to reseller the dog food to another buyer, who’s an end consumer and will feed the dog food to their dog. In this scenario, you as a reseller buyer are not charged sales tax. In other words, you benefit from tax exemption.
Sales tax has been around for a very long time. And by very long, we mean very long! For example, it’s been around in the U.S. since the 1700’s. It’s perfectly natural to wonder why it’s around and what purpose it serves.
Sales tax, as with any other type of tax, is used to generate revenue for governments. The money just doesn’t disappear. Governments use it to fund certain programs, such as public schools or hospitals, as well as the law enforcement and emergency services.
So, basically, taxes are…good?
Yes, they help keep a government afloat.
But, sometimes, they are just unnecessary! Especially if you’re a small reseller business. Remember when we talked about tax exemption somewhere up there? We at Prestige Auditors can get you sales tax exemption certificates, which will make your business tax-exempt. This will allow you to avoid double taxation.
Even Einstein was baffled by taxes, so we understand that all of this might be overwhelming. That’s why we are always available to help you out with any tax or business inquiries which you may have! All you need to do is pick up the phone and give us a call!