Business Practices 101 - NYS Sales Tax

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Last week was hectic and frustrating.  NYS Sales Tax returns were due for small business owners and I was ill prepared for the task of preparing them.   I have been playing around with various book keeping software after becoming very frustrated with keeping my books in a book- using pencils and calculators and doing math.   Eeew.


I had tried a few cheap software packages that had basic functionality I but just didn't like them.  I was still entering stuff by hand and having to print out pages and do math to determine income & expenses by category.  And what good is that?  None.  Just a pain.  More hours in front of the computer with very little benefit.

Lots of people told me to use QuickBooks.   Right.  We use QuickBooks at the Arts Council.  It is (almost) perfect for our needs there as it allows us to track consignment inventory and sales for our 250+ artists  as well as pay our artists and teachers fairly simply every month.  But it is much more complicated than anything I need for my little business and way more expensive than I can afford.  Quicken has a nice free online budgeting tool but I found that it doesn't really do what I need it to do for my business.
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I was contemplating asking someone to invent a spreadsheet for me and taking the time to learn how to use it effectively when I discovered Outright.

It is perfect.  And free.  And stores my info online so it won't disappear the next time my computer crashes.  And it updates from PayPal whenever I want it to.  And hand entering data is quick and simple.

Yay!

Outright allowed me to do 3 days worth of work in about 6 hours.  I still can't quite believe it was so easy.

One headache solved. 

The other headache involved in paying NYS Sales tax is taxing jurisdictions.  NYS does not have a flat sales tax.  Every county  and many cities and other municipalities tack on their own sale tax rates.  NYS residents pay anywhere between 7 and 9 percent for Sales and use tax - that includes a tax on delivery fees. 

So - when someone buys from my Etsy shop and I ship it to an address within NYS, I am supposed to look up their sales tax jurisdiction (there's a handy little tool here:  NYS Sales tax Jurisdiction and Rate Lookup) enter their address, discover what their tax is and send them a separate PayPal invoice for their sales tax amount. 

Ya. 

Most of my sales are between $5.00 and $10.00.  I have maybe 15 orders shipped within NYS a year.  Sooo  - most of my NYS customers get a little "tax sale" on their small orders because I would rather spend my own 40 or 50 cents to pay the tax on their order than to spend the 15 or 20 minutes it will take me to look up the jurisdiction, calculate the tax and write a PayPal invoice that they may or may not decide to respond to.   Bigger orders are more complicated - an order over 30 bucks starts to look like something worth sending out a tax invoice for.  I handle these on a case by case basis, considering how much profit I am making on the sale and how much time I have that day for accounting.  Sales that I make in person, I just include the sales tax amount in my original quote so there is no confusion or haggling over who pays the tax upon delivery.   The galleries that I sell in already calculate Sales tax for me and I am not responsible for calculating tax on orders I ship out of the state or the country.

To calculate the amount of sales tax I owed this year, I downloaded, month by month, a csv file from payPal for the months of March 09-Feb 2010.   I used Open Office to open the spreadsheets, eliminated all the columns except those that contained the date, the total sales price and the shipping addresses with zip codes.  From those spreadsheets, I was able to quickly find the orders shipped within NYS, determine their tax jurisdictions and calculate the sales tax owed.  I think the total for the year was something like 15 bucks. 

The hefty sales tax hit for me comes from paying tax on the inventory I have shipped to me from outside NYS.  That gets pricey and can be confusing as I have so many vendors and some of them (like Dick Blick and ULine) have warehouses within NYS that they ship from and, therefore, they charge the sales tax I owe on these items automatically.  Others come from out of state or even out of the country and  I am responsible to pay the tax on those shipments myself.   Outright has a little notes box for each entry so now I can tag these out of state inventory orders and find them quickly and easily next year without having to search through pages of paperwork in March. 

That makes me happy.  Now I can go back to eating bon-bons and reading stories all day.














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