Everything you need to know about Taxes in relation to your Contractor Commerce account
Sales Taxes + Contractor Commerce customers
Sales tax laws vary from state to state. You should always consult the laws in your state and consult your account and/or attorney to fully understand how this process works for your company.
Do you need to charge sales Tax?
This will vary state to state. To see if your specific state requires Sales Taxes for reselling you can refer to the resources available online or sync with your tax professional. Some general rules to keep in mind:
- If Sales tax in the your state is $0 then purchases are allowed
- If Sales tax in the your state is greater than $0, then it's only permissible if the you have uploaded your Reseller certificate on the dashboard which should have been covered during your onboarding.
For more information on selling filters in and outside of the contractors state visit this article.
Do you have to charge Sales tax on items you sell in Services?
This will also depend on the state. You can offer items such as duct cleaning, memberships, and even company swag inside Services, but will need to consult with your accountant and or attorney to understand if this will require taxes.
What is a resale certificate and why do you need one?
This will also vary state to state, but if you are in a state where this is required then you will need a resale certificate.
When using the Contractor Commerce system, our company is the "wholesaler" and your company is the "reseller". You are purchasing products from us and reselling them to your customers, and we are drop shipping those products to your customers.
The purpose of a resale certificate, also known as a tax exemption certificate, is to allow contractors to buy goods from our company without paying sales tax to us.
When doing this, it's your responsibility to collect the tax from your customers when you sell the item.
The wholesaler that you purchases the goods from (our company) will request to see your resale certificate (aka tax exemption certificate) as proof that the property is being purchased for resale.
A resale certificate typically states the name and address of the buyer (your company), the reseller's (your company) permit number, a description of the items being purchased and a statement that the property is being purchased for resale.
Without the resale certificate, a business or individual is typically required to pay sales tax on all purchases.
A tax exemption certificate can be beneficial to your business by allowing you to avoid sales tax and pass the savings on to your consumer. It can also allow you to buy more merchandise in order to grow your business.
Who collects the Sales Tax?
Contractor Commerce has a system that facilitates the collection of sales tax. ensuring that it is collected from your customer
The “Detailed Tax Report” under Reports > Accounting in the dashboard breaks down taxes by County, City and Special Jurisdiction when applicable. You can access this at anytime.
What is the "Grace Period" for Sales Tax?
We added a 6 month or 25 Order “Grace Period” to help you get their Store up and running without needing to obtain a Reseller Certificate right away.
We will still collect applicable taxes and you will still be responsible for filing taxes with your State.
Can you summarize the flow of funds when a customer purchases through my website?
When you complete the bank account configuration, our system will create a Stripe payment processing account in your company name. When you make a sale, you will collect funds from your customer via your Stripe account (this is set up on our end). At the end of each month, our platform fees will be deducted and the your earnings will be direct-deposited into your checking account. You are the "seller".
How will title to the products flow? Will you ever take "legal title" in the goods?
You take legal title to the goods when you make a sale. We sell the product to you at wholesale. You the add a markup and sell the product to your customers at retail.
Does contractor Commerce remit any taxes?
The only time Contractor Commerce will remit sales tax is if you use the wholesale ordering feature. Any other sale will be taxable and the taxes are pushed to you in your weekly or monthly payouts and become your responsibility.
What if you are selling filters to a customer who is tax exempt?
We do not currently have a way to process these sales through the normal front end of the store. Our best suggestion at this time is to order filters through the wholesale tool and then manually invoice the tax exempt entity / customer.