6 posts shown.
I have another question regarding small businesses and sales tax. I think I might have stumbled upon an answer in a previous post above.
I’m curious about this scenario: if I buy out a shop's inventory, the previous owner closes their LLC, and I take over the exact same location—potentially keeping the same business name—to continue the same line of work. Naturally, I would have to
set up my own legal entity and register everything from scratch. My theory is that, under these circumstances, I could potentially be exempt from collecting sales tax for that first year.
Does this logic actually hold water, or am I just chasing a fantasy?
brightgardener40 said:I'm curious about that DELETED LINK. Send it my way via PM if you can. Is it possible to run two separate LLCs doing basically the same thing? If that works, there might be a workaround here.
Revenue is what comes in; expenses are what go out. Profit is just the gap left over.
DELETED LINK. Thanks for clearing up the terminology.
If I'm following correctly, revenue equals gross sales.
Actually, I'm looking for a way to stay under the sales tax threshold for a full year rather than just five months until the end of the calendar year. Starting fresh in January would mean losing the commercial lease I've already secured. There has to be some loophole somewhere.!!!
John Davis8 said:DELETED LINK
It refers to gross receipts. In a sole proprietorship, there is no such thing as "profit" unless you want to define it that way... you have taxable income. I suggest you look up DELETED LINK; there’s a massive amount of info there.
Regarding point two, I don't think so... because this isn't a newly formed business...
Why on earth would you raise your prices? Look at it this way:
While I'm not paying sales tax, I'll charge $41 (while the competition charges $41) and pocket the extra $41 straight away.
Once I'm back in the sales tax system, I'll still be charging $41, but instead, $22 goes to the IRS and $100 stays with me. I'm fine with that because:
a) I'm still cheaper than the competition by a few bucks
b) I've spent a year earning $7.25 more than I even intended—but the honeymoon phase is over, and now I'm just making 🙂
.
Thanks, you've been a huge help.
DELETED LINK is great. Could you maybe clarify what exactly "gross receipts" means? The terminology is tripping me up a bit.
TRED said:If you don't hit that $85,000 threshold by the end of the year, you can stop worrying about sales tax registration for the foreseeable future.
You can't exactly "buy out" a small business like that. It doesn't work that way. What you actually do is buy into the company as a partner. Once you've secured your stake, the original owner can step away, leaving the business entirely in your hands.
All that seems like a lot of unnecessary effort if you aren't actually planning on moving over here within the next six months. $28333?!
👍 I see where you're coming from. I just can't tell if that 85 figure actually applies to what we're discussing. $0.00 Is this based on total revenue or my actual profit? If we're talking gross revenue, I’ll easily blow past that number. But then I'm stuck playing a losing game next year—I'd have to hike my prices just to stay level, which is a quick way to lose my edge against the competition.
Regarding that second method—does that actually mean I'm exempt from sales tax for next year?
Anonymous said:Has anyone here dealt with this type of small business before?
If I wanted to launch one, what kind of background do I need, or what specific professionals would I have to put on my payroll?
Regarding the animals being sold—do they have to come from certified breeders, or can I source them from any breeder out there? Also, how much oversight is there from the USDA or veterinary inspectors?
Am I allowed to manufacture my own pet food lines, and could I also get into making my own pet accessories or gear?
You'll need to hire someone with a retail background, but I'm not entirely sure about the regulations for sourcing animals.
I’m planning on launching a small retail business, specifically aiming to operate under the sales tax exemption threshold. Since we’re already past the mid-year mark, I’d only be able to take advantage of this for less than six months. From what I gather, once a sole proprietor exceeds $85,000 in annual revenue, they have to register for sales tax $0.00.
That window is far too short for my liking. I’ve been weighing the idea of setting up the business in someone else's name—say, a distant relative—and then essentially "buying out" the business from them at the start of next year. That way, I could potentially secure another full twelve months of operating without the sales tax headache.
Does anyone think this is actually feasible?
I’d appreciate any insight you can offer.