Are Taxes Testing Your Gift Basket Business?
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Okay, who’s running a business and not remitting state sales taxes? I just read a story about a Minnesota-based business owner who decided to keep all the money.
The story, published in StarTribune.com, uncovers more than just a home-based owner who innocently overlooked his obligation. But what’s basic to us is understanding that if you’ve registered your gift basket business in the United States:
1. Gift baskets are considered a luxury and are therefore taxed when sold to individuals or firms in your state.
For example, if a client lives in Vermont and your business operates in Vermont, the client is taxed. If a client lives in New York and your business operates in Vermont, the client is not taxed.
2. Gift basket profits and losses are entered on the Internal Revenue Service’s (IRS) Schedule C at the end of each tax year if you operate as a sole proprietorship, partnership, or limited liability corporation (LLC).
Meet with your accountant to make sure your taxes are filed using the correct documents, and believe me, Schedule C is just one of many necessary forms.
3. Gift basket state sales tax is remitted either monthly or quarterly depending on your state’s laws.
The business section on your state’s Web site provides more details on when the tax is due, and your accountant will also know.
Many states only accept electronic payments. Put the payment schedule on your calendar so that you pay on time.
If you make gift baskets outside of the U.S., a certain department within your country will provide all details on how to remit monies due.
I used to create massive spreadsheets by hand to determine my sales and taxes. Thank goodness that was long ago.
Now in QuickBooks, by clicking the Vendors — Sales Tax — Pay Sales Tax button, I instantly know my income and sales tax liability, and the online payment takes about five minutes. No more fingers and toes!
The Minnesota guy faces “up to five years in prison, up to a $10,000 fine, or both.” That’s no way to run a business.
Do you believe that one of your competitors is not paying their fair share of sales tax?
Will Your Gift Baskets Go Up in Flames?
What would you do if your business no longer existed due to fire?
That’s what happened Sunday night to a Long Island, New York-based florist. You can read the story at Newsday.com.
Everything was destroyed including the gift baskets also sold by the florist.
When asked about the value of his merchandise, the owner said,
“…he could not estimate his losses. ‘I couldn’t even fathom it,’…”
What a terrible situation.
Do you have a backup plan in case of fire, flood, or other situation that temporarily or permanently halts your business? Here are some things to do now before the week ends.
1. Take photographs of your workspace, inventory, and equipment.
Years ago when my husband’s car was stolen, he had lots of tools in the trunk. The insurance company would not pay him for the loss because he had no proof of ownership.
Even though he no longer had receipts, photographs would have provided proof and allowed him to recoup some of the investment.
2. Review your business insurance to learn which documents are best kept in a location outside of your workspace.
Insurance carriers don’t object to cashing your premium checks as much as they seem to object to paying you for losses. Make sure you understand the policy for your own protection.
3. Install a fire alarm in your workspace.
You may not be able to install a sprinkler system, but a fire alarm will create attention.
The florist’s fire occurred during the Columbus Day weekend. If your office is closed on certain days, perhaps unplugging all equipment before leaving is also wise.
Here’s where to learn more about photography and insurance.
What precautions have you taken against unforeseen circumstances?
Liquor Licenses and Gift Baskets Don’t Always Mix
Liquor licenses continue to be a frequently-asked question at gift basket classes. I also talk about liquor laws at Ask The Gift Basket Expert.
A newspaper article recently made public on the Web explained another side of getting a liquor license that I didn’t realize, and perhaps you also want to know.
Most cities have reached their maximum for issuing these licenses, so if you want one, you must buy it from a licensed store that’s closing. The inflated price must be staggering. And it doesn’t end there.
Once you and the seller come to a price agreement, transfer paperwork must be completed to let your city, county, or other issuing department know that you are the person purchasing the license.
Is all of this worth it just to tell clients that you can add liquor to their gift baskets?
This transfer option is, of course, only available to retail stores, not to home-based designers.
Wine and liquor alternatives are abundant. From ciders to flavored beverages, in traditional bottles or unique containers, there’s something non-alcoholic to include that will intoxicate your clients without liquors’ involvement.
If you are still searching for a liquor license, how do you see it increasing your business?
Are Your Gift Baskets Protected?
I’d be in a Miami hospital right now from heat exhaustion had it not been for the umbrella that shielded me from sun rays during my short walk to the convention center to demonstrate gift wrapping techniques at the Miami Beach Gift Show.
The protection of fabric, stretched by a wire frame, provided comfort in the sun. Insurance protection provides similar coverage for your gift basket business.
In the 1990s we used to only be concerned with product liability protection, but now there’s more on the insurance plate. There’s protection against:
Buying insurance can be a significant yearly expense, but what’s worse is having no coverage if a suit begins.
I’m personally covered by an umbrella in the sun and insurance for business protection. Are you?
Learn more about insurance options here and also about the CD, Legal Tips to Keep Your Company Out of Court.
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