Things You Should Know About Sales & Use Tax in Florida

I would like to share with you some of the information I learned at a Sales and Use Tax seminar presented by Fred Pryor Seminars. I will present this information in a Q & A format.

I must pass along the disclaimer by Fred Pryor Seminars not only as their disclaimer but also as mine.

DISCLAIMER: The principles and suggestions on How To Understand Sales and Use Tax are presented to apply to diverse personal and company situations. The materials and overall seminar are for general informational and educational purposes only. The materials and seminar, in general, are presented with the understanding that Fred Pryor Seminars (and Rhonda H. Smith, Inc) is not engaged in rendering legal advice. Companies and employers with significant legal issues and questions about sales and use tax should consult an attorney.

1. What is the sales tax rate in Florida?

A. The state sales tax rate is 6%, however many counties also require discretionary sales tax. Furthermore, the state uses a bracketed tax system which means you cannot simply calculate the percentage on the total sale and come up with the correct amount of tax, in most cases you will undercharge by at least one cent. Although this doesn’t sound like much last year in the state it amounted to over $41 million in lost revenue.  QuickBooks cannot account for the bracketed method of collecting sales tax although there are software packages which claim to work with QuickBooks to calculate correctly.

2. When I sell products to customers in Florida do I charge sales tax for my county or theirs?

A. If they walk into your store you charge the state sales tax plus your store location’s county discretionary  sales tax (if applicable), if you ship your product to the customer you charge the state sales tax plus their county discretionary sales tax (if applicable).  Florida is considered a destination state, meaning you charge the sales tax based on the destination.

3.  If I sell to a business that has a tax exempt certificate are sales to that customer tax exempt?

A.  YES, if the product they are buying is directly for use of their particular type of business activities and if they pay with a check , credit card, or purchase order with the same name as is listed on the exempt certificate. You will need to have a copy of the exempt certificate for your files.  However, you must charge sales tax if the customer is purchasing a product that is not directly for the use of their business activities (such as a chicken farmer buying dresses  as this is not directly for use in that line of business) or if an employee of the business buys products and pays with their own credit card.  

4. Do I report all sales on the sales tax return or only the taxable sales?

A. All sales. The report(s) of sales should match your IRS tax return. There is a place on the tax return to account for non-taxable sales.

5. If I have no “Use” tax can I just leave that line blank?

A. NO. If you leave the “Use” line blank there is no statute of limitations for auditing.

6. Why would I owe “Use” tax?

A.  There are at least 10 reasons you would owe “Use” tax. One of the biggest is by purchasing things online and not paying sales tax. Most people owe “Use” tax.

7.  Do I owe sales tax when I invoice a customer or when I receive the payment?

A.  In Florida sales tax is due when you invoice a customer, not when they pay the invoice.  Even if they only pay part of the invoice, or pay a deposit, the sales tax is due on the entire invoice per the date of the invoice.

8.  Is shipping taxable?

A. For the most part YES.  Shipping and tax need to be separate line items. NEVER create a sales receipt or invoice that says shipping and taxes included. Tax and shipping should always be separate line items.

9.  If I sell products online to customers in other states do I owe sales tax?

A.  If there is Nexus.  The common reasons Nexus exists are; an employee lives in the state, the business owns property in the state, the business advertises in the state, or the business stores inventory in the state. There are more reasons that are less common and the reasons vary from state to state.  Some cities in others states also have different rules.

10.  If I buy items for use in my business and pay sales tax do I need to keep those receipts?

A. YES. Not only do you need to keep the receipts, if they are printed on thermal paper you should photo copy the receipts  as the thermal paper will fade. If you are audited and the receipt cannot be read you may be assessed the sales tax plus penalties and interest.

11.  Do all businesses have to register to report and pay Sales and Use Tax?

A.   If you retail a product then YES. If you ever buy products for use in your business and do not pay sales tax on the purchase, YES, as this becomes “Use” and is subject to “Use” tax.  If you register you must file reports even if you owe no Sales or Use tax otherwise you will receive a penalty for not reporting.  You will either be required to report monthly or quarterly, the state will make this determination.

12.  Am I liable for paying sales tax on purchases or is the seller liable?

A. Florida is considered a “Transaction” state therefore both parties are liable for the tax until one party pays it.

1099s are due to be mailed to your subcontractors by Tuesday, January 31st.

After watching "Midnight in Paris" last night my wise husband said, "You can't live in the past...there is no future in it."

New IRS 1099 Reporting Regulations

If you have paid 1099 contractors or vendors in the past year using payment forms other than cash or check, you need to be aware that the IRS has issued new reporting regulations for tax year 2011 1099-MISC form.

These regulations will exclude payment types such as credit cards, debit cards, and those from third party payment networks, like PayPal, from the 1099-MISC form that will instead be reported on the new third party form 1099-K. For more information on the new regulations and how they impact your business click here.

To help comply with the new regulations using your QuickBooks 2009, 2010 or 2011 you have three options to choose from:

In tax year 2011, if you only paid a few 1099 vendors with credit cards, debit cards, or third party payment networks, like PayPal, you might consider the manual option.

1. Manually find and exclude the appropriate payments by following the steps here.

OR

If in tax year 2011, you paid more than a few 1099 vendors with credit cards, debit cards, or third party payment networks, like PayPal, we suggest purchasing the QuickBooks 1099 Assistant or upgrading to QuickBooks 2012 to access the updated 1099 Wizard.

2. Purchase the QuickBooks 1099 Assistant (a downloadable app) to help identify and exclude the appropriate payments from your QuickBooks 1099-MISC forms; the Assistant will supplement the existing QuickBooks 1099 printing and filing features. To find out more about the QuickBooks 1099 Assistant and how to purchase it for $0.99, click here.

OR

3.Upgrade to QuickBooks 2012 which has, among many other features, an updated 6-step 1099 Wizard that will help identify and exclude the appropriate payments from your QuickBooks 1099-MISC forms.

For more information on the updated 1099 Wizard, click here.

To purchase QuickBooks 2012 and save money on QuickBooks click here.

In preparation for my QuickBooks seminars in PA next week...

I just bought: 'Satechi SP400 Smart-Pointer 2.4GHz RF Wireless Presenter with Mouse Function and Laser Pointer - Blue (SP400BLU)' by Satechi

www.amazon.com

SP400 Smart-Pointer 2.4GHz RF Wireless Presenter with Mouse Function and Laser Pointer enables you to control your onscreen presentations within a range of 100 feet, making it the perfect tool to use in a large conference room. The presenter supports the most common PowerPoint presentation functions including Page Up, Page Down, Mouse Arrow, Right Click, Left Click, Darken Screen, and Resume Screen. It also has a laser pointer built-in to help your audience focus on key points of your presentation. The compact and lightweight design lets you control your presentation with ease as you present. Just plug and play and you are ready to go - no software is required. No need to aim the transmitter to the receiver. Minimum system requirements: Windows 7, Vista, XP, Mac OS with one USB Port 

Should I pay to advertise my business online?

Question: Should I pay to advertise my business with an online directory?

Answer: The business owner who asked this question did not have a website yet and thought perhaps listing his business with online directories would be a good way to get some web exposure.

I disagreed.

Here's why. If someone finds his company through an online directory the next thing they will most likely want to do is look at his website. Since he doesn't have one, they will probably count him out. They will look at his competition, who does have a website, then call them.

I advised him to spend his money on securing his domain name and web hosting. He told me he has had web designers offer to create a site for $800-$1000 but that is not in his budget yet. Since he has a shoe string budget I suggested he host with a site that offers website templates so he can quickly get a site up for little money. 

By developing a site from a template he can start to create a web presence for his business. As his business grows he can budget for a better website and decide if he wants to advertise with the online directories.

In today's world we want to know as much as we can about the people and businesses we spend our money with.  An online listing without a website just doesn't give enough information and in my opinion would just be a waste of money.

How to Memorize Invoices in QuickBooks

QUESTION: Is there is a way in QuickBooks to create an invoice one time and then have QuickBooks enter it every month for the next year.

ANSWER: Yes. In QuickBooks this is called, Memorize Transaction.  To memorize the invoice do the following.

1. Create the invoice for the current or upcoming month.

2. Go to the Edit drop down screen and choose Memorize Invoice (or CTRL + M).

3. In the Memorize Transaction box

• Choose Automate Transaction Entry 
• How Often choose Monthly 
• Next Date choose the date of the next invoice after the one that is on the screen 
• Number Remaining is how many after the one that is on the screen in this case 11 
• Days in Advance to Enter is when you want the invoice to enter into your QuickBooks

That's it, just that simple.

You can also memorize bills, checks, sales receipts, and credit card transactions.

Welcome to Your Business Your Life Your Way

Are you ready to get 2012 off to a great start? Here are 12 tips to boost your productivity.

1.  Set daily goals.  Without clear focus, it's too easy to buckle under to distractions. Set targets for every day beforehand. Decide what you will do, then DO IT.

2.  Set no communication times.  Apportion uninterrupted blocks of time for work where you must focus. During these times do not answer the phone, emails, or social media.

3.  Set micro-mileposts. When you start a task determine the target you must reach before stopping. For instance, when working on a book, you may decide not to get up until you have written at least a thousand words. Hit your target regardless what.

4.  Dreaded first. To shoot down procrastination learn to undertake your most obnoxious task first thing in the morning rather than delaying it till later in the day. This little triumph will set the tone for a really productive day.

5.  Bust procrastination. Take action instantly after setting a goal, even if the action isn't perfectly planned. You are able to always correct course along the way.

6.  Time framing. Give yourself a fixed period of time, like half-hour, to make a dent in a job. Don't worry about how far you get. Simply put in the time.

7.  Apex Cycles of Productiveness.  Identify your most productive time of the day and schedule your most crucial jobs for those times. Work at minor or menial tasks during your non-peak times.

8.  Change your hours. If you find too many interruptions and distractions in normal working hours change your hours to start earlier and finish earlier or to start later and finish later.

9.  Clear the clutter.  Cut down on stress by cultivating a relaxing, clutter-free workspace.

10. Accountability.  Tell other people of your commitments, they will help hold you accountable.

11. Visualize.  Visualize your goals as already achieved. Put yourself into a state of actually being there. Make it actual in your mind, and you will soon see it in your reality.

12. Reward yourself.  Give yourself frequent rewards for accomplishments.