Use of SS Number for buying wholesale in NYC...
Patricia Dumas
I've been told by an accountant, that if I have a home business making
jewelry, I can use my Social Security number when buying wholesale and
not paying tax..I
Is this so? If anyone would like to enlighten me more on this, I would
very much appreciate it...Thanks...
Pat
NJ
Jeff - jewelrylife.com
Good luck!! I doubt it, but I could be wrong. Here's an example: I live in
NH. In NH we do not have a sales tax so instead TIN (Tax Identification
Numbers) we have EIN (Employer Identification Number). Even with that, which is
a legal number for doing business according to the Federal Government, it isn't
uncommon to get trouble from shows and other trade locked institutions. I
question the validity of the statement someone made to you about using your
Social. I'm SURE you can get away with it by printing up business cards,
letterhead, or an invoice and then writing your SS# all over them. However,
that is not an ethical thing to do and would make the IRS VERY unhappy. You
should be aware that at many shows the IRS is
there....monitoring.....waiting....counting.....lurking......foaming...LOOKING
for people just like YOU!! Ha ha!!
I'd also question the "Home Business" portion of your post. If you're any
business you need to make it legal. Just because you work at home doesn't mean
you're exempt from paying taxes. Your accountant seems to be doing you a great
disservice. Wait until the IRS reads this post!! (I'm sure there are fans of
jewelry in the IRS!)
I'd contact your state's treasury and find out the truth before you get burned 5
years down the road by the IRS.
Check your accountant's temperature
-jeff
NE333RO
>jewelry, I can use my Social Security number when buying wholesale and
>not paying tax..I
>
>Is this so? If anyone would like to enlighten me more on this, I would
>very much appreciate it...Thanks...
Wellllllllll, yes and no. You'll have to forgive me if my information isn't
quite as accurate as you would like it to be but its been 10 years or so since
I dealt with this stuff. As I remember it, when self-employed the government
uses your social security number in place of an employer ID number. I honestly
don't even remember if it was the state or federal government.
The germane point however is that most wholesale jewelry or findings
companies are going to require more proof than just your social security number
that you are a business owner. I've had a number of them ask for photo copy's
of business licenses and any number of other forms of proof before allowing an
account to be opened.
So if in fact you are'nt in business, and arent paying taxes on what you
sell, you shouldnt be reaping the benefits of buying wholesale and not paying
sales tax. On the other hand if you are a business (jewelry) owner you deserve
those benefits.
Peter W. Rowe
<pdu...@earthlink.net> wrote:
>>Hello all..
>>
>>I've been told by an accountant, that if I have a home business making
>>jewelry, I can use my Social Security number when buying wholesale and
>>not paying tax..I
>>
>>Is this so? If anyone would like to enlighten me more on this, I would
>>very much appreciate it...Thanks...
>>
>>Pat
>>NJ
It's actually two seperate issues, taxes and wholesale purchasing.
If you have a sole proprietorship type of business with no other employees, then
you probably identify your business to the IRS with your social security number,
and file federal and state personal and business income taxes using that number
as identification.
However, buying wholesale and paying sales tax are different, and usually
connected with STATE or local taxation authorities. Some states do not charge
sales tax, and in these states (if your city also does not impose a sales tax),
you don't pay sales tax in any case. In those states where you normally pay
retail sales tax, you apply for a sales tax/business license in order to not pay
sales tax on items you purchase that will be resold, or will be part of items
resold, on the logic that in these later sales you make, the items cost will be
included in the retail price you charge, and upon which sales tax will then be
due. On these sales you make, you then must, of course, charge and file sales
taxes. The exemption is there so that the tax is not charged twice on the same
merchanidise.
In many states where this is the system, if you use your wholesale tax exemption
to buy items which will not be actually resold, such as items you keep for your
own use or give as gifts, then you become the end user, and you then are
supposed to file and pay the tax on them, as part of your regular sales tax
filing. Usually this form of the tax is called a "use" tax, not a sales tax.
And remember that items like tools, or supplies consumed in the making of the
jewelry but not actually a part of the end product, which you may purchase for
use in your business, are still taxable (sometimes at lower rates), since you or
your business are the end user of the item. It's only things that will actually
be resold, and liable for the tax at that time, that are supposed to be exempt
from the tax when you buy it.
So much for the tax issues.
A completely seperate issue is the bit about qualifying as a wholesale buyer.
This depends very much on the vendor your dealing with.
At many of the travelling regional gem shows, such as the GLW shows, you must
register as a buyer and show a sales tax license, ostensibly to prove that you
are indeed a wholesale buyer. And while some of the reason these shows do this
is security, or wanting to assure actual wholesale buyers that they won't meet
their retail customers in the show buying from the same sources they wish to buy
at, perhaps the bigger reason is that the shows do not wish to have to bother
with sales tax filing themselves. With these shows travelling all over the
country, every dealer would have to register and file sales tax forms and
amounts in every state they held a show in, and the result would be a horrendous
amount of paperwork for all these dealers, many of whom are small operations.
By requireing that all buyers are licensed to handle the sales tax issues by
themselves, the show's dealers then don't have to worry about either filing the
taxes, or the potential legal problems incurred if they do not. Because these
tax issues are really the primary motive of these shows, they often do not make
great effort to make you prove that you do indeed have a business. The same can
be said of vendors like Rio Grande or similar vendors, who are happy to sell to
retail customers as well as professionals, and offer to waive sales tax for
wholesale buyers, but don't actually require or care whether you've actually got
a business, only whether you've got the needed license.
However, the best prices, and true wholesale level purchasing, occurs with
vendors who do actually require that you be a business. For these vendors, the
issue is not taxes at all, but protecting the interests of their customers,
retail jewelers who don't wish to have their own customers be able to buy at the
same level they do, thus cutting them out of the picture. It's in the business
interests of these vendors to restrict who they will sell to. Similar to these
vendors are the major wholesale jewelry shows (not those gem shows open to
almost anyone with any sort of business or access to a sales tax license
number). Here it's also a security issue, making sure that only people who are
legitimate wholesale buyers, not just generally, but specifically of the type of
merchandise offered at the show, are allowed in. This saves the time of sales
people too, not having to spend time with browsers who are not actually in a
position to place significant orders or become regular customers. And it helps
to reduce theft.
For shows like this, often the requirements for admission are quite extensive.
you pretty much must prove that you have the type of business that these vendors
are looking for. Often, a home business is not enough. You sometimes must
submit not only references, copies of invoices from other similar venders, but
even photos of your store front, unless you are an already known business, such
as if you are well rated in the JBT book. Frequently, even after proving that
the business you are associated with does indeed qualify, you must then also
provide evidence that you are indeed an authorized wholesale buyer for that
business, not just one of the interested other employees.
Individual companies who also deal at this level of wholesale only sales may
also require similar proof that you are, indeed, in the relevent business.
Companies like Stuller, for example, won't sell to you until you've submitted
not only your sales tax license if you are in a state that collects sales tax,
but sufficient other proof to show that you are indeed in the jewelry business.
For all these purposes, your social security number will have no relevence or
use, and attempting to give it instead will probably serve as a big red flag to
the vendors that you don't know what you're doing, and don't belong there...
Hope this helps.
Peter Rowe
David D. Arens
If it were me, I'd go get a sales tax or business license from your state or
local
licenseing athourity. Your Social Security # is meant to be used by you, your
employer & the Social Security Commission for accumulating & paying out your SS
benifits. Using it for any other means is just inviting trouble. There are many
folks whose 'ID' has been stolen by scam artists using only a SS #. Large credit
card debt has been run up by people using illegally acquired SS #s. Your credit
record can be ruined.
Use your SS # for what it'sintended for, nothing else.
Dave
C M
<pdu...@earthlink.net> wrote:
>Hello all..
>
>I've been told by an accountant, that if I have a home business making
>jewelry, I can use my Social Security number when buying wholesale and
>not paying tax..I
>
>Is this so? If anyone would like to enlighten me more on this, I would
>very much appreciate it...Thanks...
>
I'm not sure. You mean for purposes of buying wholesale? I'm not
in NJ so I don't know the local laws, but in OR you mainly need a
registered business name ( a DBA or Doing Business As) if you aren't
incorporated.
Laws on taxes, especially sales and Value-added tax vary greatly
from state to state. When I sell in Washington I don't have to
collect tax from Oregonians who have their id and I don't have to get
tax from retailers who buy my work wholesale. Oregon doesn't have a
sales tax.