If I purchase certain supplies for use on a job and expense them under say, Project Expenses, and then put these items on the customers invoice BUT mark them up by a percentage, should I be paying sales tax on that markup? I have already paid sales tax on the original item for the original price, but not the extra I am charging the customer.
If the items you purchase are for the final product you sell to a customer you do not mark them as an expense in your books. They are a part of your inventory and you would then credit an account generally titled Purchases which is an account set up to figure COGS.
If you are purchasing items for resale, why are you paying sales tax on your purchase? Get a resellers permit.
Aside from that bit of information, you must charge sales tax on the entire price of the item being sold if you are charging sales tax. Beverly
I have a resellers permit, but these are generally small items that I don't carry in inventory nor purchase from my regular wholesalers, generally small items from the hardware store and such, thus I pay sales tax when I purchase them. When I remit my sales tax return, I get credit for any sales tax I paid on resold items and then collected from my customers.
"Jimmy" wrote
Yes. You would actually charge your client sales tax on the marked up price, and when you go to pay the tax, get a credit on the tax you paid when you bought the products.
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