Sale, but not resale...

Posted by Allan Martin on May 30, 2007, 9:43 am

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>I own two businesses: Mine, and my wife's (co-owner). Yesterday, my wife's

>biz needed a new printer, so I purchased one with my biz credit card. My

>wife's biz paid me for it.

> How do I account for this? I don't want to invoice her and charge her

> sales tax on the printer (I'm a computer equip. reseller, btw). I just

> want to transfer the cost to the other biz.

> Any suggestions?

Record the credit card purchase to a balance sheet account called Due from
Wife's Biz. Record the check received from your wife's biz to the same
account.

> grep

Posted by Phil Nelson on May 30, 2007, 6:27 pm

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Allan Martin wrote:

>> I own two businesses: Mine, and my wife's (co-owner). Yesterday, my wife's

>> biz needed a new printer, so I purchased one with my biz credit card. My

>> wife's biz paid me for it.

>> How do I account for this? I don't want to invoice her and charge her

>> sales tax on the printer (I'm a computer equip. reseller, btw). I just

>> want to transfer the cost to the other biz.

>> Any suggestions?

> Record the credit card purchase to a balance sheet account called Due from

> Wife's Biz. Record the check received from your wife's biz to the same

> account.

Just curious, is a balance sheet account the same as a clearing account
(discussed earlier in a similar context)?

Also, I don't wish to spoil the party, but in my state at least, by
law, someone has to pay the sales tax, sooner or later. If it was my
business, I would invoice.

Of course I'm not married, so what do I know.

--
Phil Nelson

Posted by Laura on May 30, 2007, 9:14 pm

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> Allan Martin wrote:

>>> I own two businesses: Mine, and my wife's (co-owner). Yesterday, my

>>> wife's biz needed a new printer, so I purchased one with my biz credit

>>> card. My wife's biz paid me for it.

>>>

>>> How do I account for this? I don't want to invoice her and charge her

>>> sales tax on the printer (I'm a computer equip. reseller, btw). I just

>>> want to transfer the cost to the other biz.

>>>

>>> Any suggestions?

>> Record the credit card purchase to a balance sheet account called Due

>> from Wife's Biz. Record the check received from your wife's biz to the

>> same account.

> Just curious, is a balance sheet account the same as a clearing account

> (discussed earlier in a similar context)?

A Clearing account IS a balance sheet account.

> Also, I don't wish to spoil the party, but in my state at least, by

> law, someone has to pay the sales tax, sooner or later. If it was my

> business, I would invoice.

If the husband paid the sales tax on the original purchase then they don't
need to pay it again. Only 1 person needs to pay the sales tax. I think the
OP is thinking that an invoice automatically triggers sales tax. He could
make the sale tax exempt assuming the husband paid the sales tax already. If
he did not pay sales tax, then the wife should pay it. It can be treated as
either sales tax or Use tax.

> Of course I'm not married, so what do I know.

teehee

Posted by Phil Nelson on May 30, 2007, 11:42 pm

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Laura wrote:

...

>> Also, I don't wish to spoil the party, but in my state at least, by

>> law, someone has to pay the sales tax, sooner or later. If it was my

>> business, I would invoice.

> If the husband paid the sales tax on the original purchase then they

> don't need to pay it again. Only 1 person needs to pay the sales tax. I

> think the OP is thinking that an invoice automatically triggers sales

> tax. He could make the sale tax exempt assuming the husband paid the

> sales tax already. If he did not pay sales tax, then the wife should pay

> it. It can be treated as either sales tax or Use tax.

Right. My interpretation was he hadn't. If he did, then he is not
required (technically, at least) to pay the tax twice.

What I do (in the state of California) when I invoice items that I
paid sales tax on at the time of purchase is note "8.25% CA sales tax
included" in the description of each item and I don't mark them up.
These items are marked non-taxable in my database and everything
works automatically when I invoice.

This is my understanding of the required procedure according to the
advice given me by a couple of tax consultants at a free seminar I
went to once. Your percentage may vary. I think some states don't
require it spelled out on the invoice like this, but according to
the tax consultants, California does.

I assume the government won't complain if you decide it's not
worth all the complication and just pay twice, as long as they
get their money (twice).

Be aware, I am neither a tax professional or an accountant and my
method has not been tested in actual um, audit.

--
Phil Nelson

Posted by Arno Martens on May 31, 2007, 4:32 pm

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wrote:

>> Allan Martin wrote:

>>>> I own two businesses: Mine, and my wife's (co-owner). Yesterday, my

>>>> wife's biz needed a new printer, so I purchased one with my biz credit

>>>> card. My wife's biz paid me for it.

>>>>

>>>> How do I account for this? I don't want to invoice her and charge her

>>>> sales tax on the printer (I'm a computer equip. reseller, btw). I just

>>>> want to transfer the cost to the other biz.

>>>>

>>>> Any suggestions?

>>>

>>> Record the credit card purchase to a balance sheet account called Due

>>> from Wife's Biz. Record the check received from your wife's biz to the

>>> same account.

>> Just curious, is a balance sheet account the same as a clearing account

>> (discussed earlier in a similar context)?

>A Clearing account IS a balance sheet account.

>> Also, I don't wish to spoil the party, but in my state at least, by

>> law, someone has to pay the sales tax, sooner or later. If it was my

>> business, I would invoice.

>If the husband paid the sales tax on the original purchase then they don't

>need to pay it again. Only 1 person needs to pay the sales tax. I think the

>OP is thinking that an invoice automatically triggers sales tax. He could

>make the sale tax exempt assuming the husband paid the sales tax already. If

>he did not pay sales tax, then the wife should pay it. It can be treated as

>either sales tax or Use tax.

>> Of course I'm not married, so what do I know.

>teehee

He said that he is a computer reseller.
In my neck of the woods that means he did NOT pay the sales tax and that
he would HAVE to charge it on a sale to his wife's business.

As you said, 1 person HAS to pay the tax.
--
Cheers,
Arno