Biz Tuesday: Keeping track of sales tax while vending

Here’s more business tips from Amy Kalinchuk, the Soap Crone, about how to make 2012 your year to make your craft business legit! Find her first post here, and second post here . Enjoy!

By now you have received your tax license from the state and city where you live, and you are getting ready for your first show. Today I will share with you my system for keeping track of sales tax while vending. As with my other systems, it’s easy, because I’m lazy and don’t want to think about it while it’s happening.

1. Have an inventory sheet. My sheet has a simple table on it, filled in with every type of product I have for sale. I make a tally mark next to the items that sell. This way I can see what is the “best seller” for that day/show, etc.

2. On this inventory sheet, I have a small table at the bottom that says: Total Sales, % Tax Collected, Net Sales.  At the end of the vending day, I multiply my total sales by the tax rate that I’ve been collecting, and fill that in. I then subtract that from the total to get the net sales. I have never been sure that this way is mathematically exact, but it doesn’t have to be–I just want to know about how much money to put aside, in order to be able to remit my sales tax.

Example:  Total sales: $252.37

Multiply that times the Denver tax rate of 7.72:  252.37 x .0772 = $19.48

For that vending day, I will need to set aside about $20 for sales tax.

3. Another trick I use: at the very bottom of my inventory sheet, I have a cheat! I have a note for myself that says:  Purchase x 1.0772 = Purchase with tax.   That way I don’t have to remember the tax rate (I vend in different cities), and also if you multiply the whole thing by one (1) and the tax rate, you don’t have to do the extra step of adding.

4. Because vending can sometimes get hectic, I also have a section on my inventory sheet that has the after-tax totals for popular items listed. 1 soap = $5.95, 2 soaps = $11.85, etc. After a while, these are memorized, which also makes vending easier.

Let us know your tips and tricks or questions in the comments. Sharing this knowledge with a newbie could really help her out.

Amy Kalinchuk does her taxes in Denver, Colorado. She had a really good eBook month in January. Have you ever wanted to write a crafty ebook? She’d love to hear from you: http://www.crafte-revolution.com