Does selling items such as fishes being tax in NY?

[johnseito]

and do they also tax your business? If they do, how do they tax your business is it by taxing your income of business and if this is so, how do they know how much you collect? You could report such and such but you may have collect more than what you reported.


Let me know from your experiences. thanks

[Evan]

I don't know about NYS taxes. Are you talking about fish for consumption, and selling the fish (that are still alive, or perhaps dead)? If you're selling them to a restaurant, as they will ultimately charge the sales tax, you generally wouldn't be (they're exempt). But if I go to try to buy fish, as I am not in the business of reselling them (in some form or fashion), you should be collecting tax for me.

Generally, you always will have an income tax.

[johnseito]

Thank you for your response Evan


I mean selling the fish as live fish as pet. Like pet land. And for the income tax you are referring to, I am wondering how do the govt know how much am I making or selling? They only know by what I report and put know when I file my tax return but what if I only file what I want them to tax me. Do you know what I mean?

I mean how would they do a accurate check of my income and tax me accordingly?

Thanks!!!

[johnseito]

Do you know if there is a sales tax with that and what is the percent of the sales tax, is it the generally 8 cent of every dollar?

[vangogh]

Evan will probably know better than I will, but I would think if you're selling the fish as pets you would be required to collect sales tax. I found this document on sales tax for veterinarians in New York (http://www.tax.state.ny.us/pdf/publications/sales/pub851_1006.pdf). It does give an example of selling pets


A veterinarian who operates a bird hospital sells many different types of birds. The receipts from the sale of birds by the veterinarian are subject to sales tax.

Here's the site for the New York State Department of Taxation and Finance (http://www.tax.state.ny.us/). You should be able to find details there that will help. The site will likely have better information than any of us here.

As far as how will the government know how much you make. They likely won't. It depends on how you collect money. The people you sell to could end up reporting the sale depending on their taxes. Unless all sales are cash only there's a record of each sale somewhere. The government probably isn't going to find out, but you never know. Also keep in mind that if you don't pay your taxes you're basically stealing from the rest of us. It means we're having to pay a little more than our share. We're not going to come after you either, but paying is the right thing to do.

You'd also have to keep the entire business under the table, which means you'd lose out on any protection in regards to any kind of dispute.

[Steve B]

When you sign your income tax form you are verifying that you have told the truth on the statement. Not doing so makes you a criminal. There is always the potential of an audit where things like this may be discovered and you will then have to face any consequences of a false report. On a very small scale - it would be very difficult to get caught - but, why turn yourself into a criminal to save a few dollars in taxes?

[Evan]

Ah, the living fish as a pet kind -- one that I had thought of, but this is why specifics are always good. I would foresee that being a taxable item. As for the specifics, the Division of Taxation should hold the answer to your case. You may also have to collect a county tax, if that is at all applicable in NYS.

The government will not know what you actually make, but there will be records that exist, and they can try to reconstruct the records if you didn't -- which almost never works in your favor. Stiff penalties exist for underpaying your taxes, and you can go to prison for tax evasion. If you file a fraudulent tax return, the IRS has an unlimited statute of limitations, meaning they can audit you ANY number of years from now and assess interest and penalties. Ordinarily, it is three years (but sometimes six years) -- no so with fraud. Also, there are penalties for doing the same with your state income tax return, and failing to remit sales tax can also lead to another separate audit. If you are delinquent with income taxes or sales tax remittances, the state can prevent you from obtaining certain business licenses necessary to operate. If you incorporate or organize, the state can also revoke this entity from operating.

[vangogh]

If you live in New York City there there are also city taxes to pay as well. One year I worked a couple of days in the city and filed a city return just to get a refund of the $2 or so they had taken from my paycheck. It was the year I moved out to Colorado so I was filing in 2 states + the city + the usual Federal return. I'd also worked a variety of temp jobs. I think there I had 8 different jobs in total that year. One of the more confusing tax seasons for me and it was hard to staple all those W2s to the form. :)

[johnseito]

Thank you for your response.


The people you sell to could end up reporting the sale depending on their taxes. Unless all sales are cash only there's a record of each sale somewhere.

You mean if it sales to the people and I collect taxes, it is automatically reported? But taxes are up to me to collect no? Maybe one day I say no tax or decided not to collect taxes then how is it reported.

I don't even know how much to tax and the process or reason behind it. The income tax from a business is when I provide the income report of making sales to the accountant and they report it for me to the govt right? and the govt upon viewing them, would either have me pay them money or they would give me money, how does that work?

I know income from working is the govt takes taxes about 30-40% from your payroll, in the end when you file tax return they either say you owe this much or they says we owe you this much and they pay back to you.

so how does a business income work, they don't collect taxes until the end of year where we file taxes?

[vangogh]

Sales tax and business income tax are two different things. With sales tax you have to collect on each sale and report that to the state. In New York it's around 8.5% of the purchase price.

Business income tax depends on how you set up your business. If you're a sole proprietor, which is likely the case you'll file the same income tax you would if you worked for someone else. The main difference is you'll have other forms to fill out to show what you earned for the year. You won't have employers sending you W2 forms. You generally fill out the 1040 Schedule C to report your income from business and use the information on that form in your form 1040.

The link I gave above should have all the information about collecting sales tax and paying income tax.

[Evan]

John -- I would highly recommend working with an accountant to discuss starting this new business, and establishing a good relationship early on. They can help you make sure you're in compliance with all these various taxes.

Just as we accountants wouldn't know a thing about fishes, we don't expect our clients to know much about accounting. That's why we're in business :)

[vangogh]

I'd agree. It won't have to cost too much either. You don't have to hire an accountant full time. You just need some consulting to get you started. Another option is to get in touch with the Small Business Administration (SBA). They have accountants there that will often help with advice for free. It won't be the same level of help you'll get by hiring a few hours of an accountant's time, but it will be some help.

[johnseito]

what about seller's permit. Do you think this is necessary and what is the point of this? Thx

[vangogh]

If the state of New York requires you to have a permit or license then you should get one. Otherwise you could be shut down at a moment's notice. If the state doesn't require one then I'm not sure you would need to get a permit or license.

[Evan]

Forgive me for saying, but you're asking a bunch of state-specific questions, which is best handled by an in-state professional. As I don't have NYS clients, I am not familiar with all of the requirements to be in business. But before doing anything, you should know all of those answers, or find someone who knows those answers (or be willing to do the research yourself).