How Confusing are Your Gift Basket Tax Laws?
Making sense of the sales tax laws in your state or country is an important part of running a gift basket business.
That’s because you need to know when to collect taxes and how to remit them.
However, there are times when collecting taxes on some sales and not on others will be confusing, a good reason why getting advice from an accountant that specializes in small business rules will be a huge help. That’s a point I make on pages 71 and 72 in the updated gift basket book.
This article about collecting taxes on bagels sold in New York is a good example of a law that makes you say, “Huh?”
According to the article, New York state’s laws on bagel sales are:
- If it’s sold whole, the bagel is not taxed.
- If it’s sliced and/or topped with a spread, it’s taxed.
- If the customer leaves the store without eating the bagel, it’s not taxed.
- If the customer eats the bagel in the store, it’s taxed.
Can you imagine trying to figure out how to apply tax to a gift basket in that manner? Thankfully, U.S. laws generally mandate taxing gift baskets sold to residents in the state where you do business and not to out-of-state customers. Other laws may apply according to where you live.
What if a state’s or country’s laws specified a gift basket tax if:
- The customer owns a cat but not a dog.
- The place where the basket is delivered is surrounded by a white picket fence.
- The recipient works in construction but only on houses, not commercial buildings.
If these examples make you shake your head, you can imagine what bagel sellers are going through.
The bottom line is to know your tax laws and maintain a relationship with a knowledgeable accountant who can update you on rules you can’t possibly decipher on your own.
What problems have you experienced with sales tax laws in your area?
Your Gift Basket Business Name May Land You in Court
What if your postal mailbox included an attorney’s letter telling you to cease and desist from using the name you chose for your gift basket business?
That’s what’s happening right now to a New Jersey-based gift basket company whose name allegedly resembles a well-known brand, according to a trademark infringement lawsuit lodged by Build-A-Bear.
The big bear retail business, which is often found in malls across the U.S., states in their lawsuit that a gift basket firm’s name copies their own, which causes consumer confusion.
Such lawsuits have occurred in the past, some of which come to light in the news and others that are settled without media knowledge. This problem is an example of what you may not know when starting your business, which is why I interviewed small business attorney, Robin Gronsky, on the CD Legal Tips to Keep Your Company Out of Court.
How would you react if you were in this gift basket business’s shoes?
Why Don’t Cities Appreciate Our Home Businesses?
You start a business making gift baskets, and your enterprise does a lot more good than harm in your region. It:
With all of this goodness, and much more that I haven’t mentioned here, why don’t cities bring their home-based business rules up to speed with the way people make money today?
Everyone doesn’t work in a traditional office, and some of us would rather not. I can understand that there must be rules for people who work at home, but it seems that many cities don’t want to know you work there or, if they find out, they immediately want you to stop.
I’ve often said in my classes that we don’t hurt children or animals, and we’re not employing or exploiting minors or illegal residents. Our deliveries don’t clog up the roadways anymore than orders that arrive to people receiving items from home shopping shows.
So what’s the problem? Can we be allowed to make gift baskets that foster good business and goodwill between people without the threat of cease-and-desist letters?
I discuss this situation in depth in the book, How to Start a Home-Based Gift Basket Business, which includes methods to persuade city officials to let you conduct business from the comfort of your home.
What’s going on in your city? Is your business embraced, or do you have to keep your location under wraps?
Are Wines and Alcohol in Your Gift Basket?
There were lots of discussions about problems that cause legal headaches during yesterday’s Q&A portion of my Philadelphia Gift Show gift basket seminar.
One retailer told us about her dismay when adding a bottle of alcohol to a gift basket that was brought to her by the customer. While she didn’t buy it, she was still part of a lawsuit due to its consumption.
This is a subject discussed in the past at Ask The Gift Basket Expert and one that will always be part of the industry because of our desire to satisfy customers while attempting to keep our businesses out of the court system.
I’ve often been asked by new designers about the parameters of adding wines and alcohol to gift baskets. While it’s widely known that buying and adding it if you don’t have a liquor license is prohibited, I hear other questions such as, “Can the customer bring the wine to me?”
This ongoing dilemma and similar concerns are the reason why I spoke with small business attorney, Robin Gronsky, on the CD Legal Tips to Keep Your Company out of Court.
It’s wise to know your city’s and state’s laws about liquor, and only you can research this by calling the proper officials.
What wine and alcohol questions do you have about adding either to your gift baskets?
When I Receive An Attorney’s Letter, I…
In the book, How to Start a Home-Based Gift Basket Business, there’s a mock letter in chapter three from an attorney that states you are using the same name for your business as another firm that has trademarked the name.
The letter continues by demanding that you stop using the name and shred everything in your possession with that name, and it’s all to be done within a certain period of time.
That’s just one type of letter that can end an otherwise great day, and designers worldwide can tell you about other types of attorney demands that they’ve received in the past.
This problem is one of the reasons I spoke with attorney at law, Robin Gronsky, and recorded the conversation on the CD Legal Tips to Keep Your Company Out of Court. Robin continues to be a source of assistance to me as I operate my business.
What if you’ve not retained legal counsel to handle such letters? When you receive an attorney’s letter, it’s a situation that’s best not addressed on your own.
You may hope that the problem goes away or think you cannot afford legal advice, and you could be right. But are you willing to sacrifice all of your hard work?
In the late 1990s, I can recall traveling to New York City for months as I navigated my way through Manhattan courtrooms. It’s not fun.
Legal counsel did not accompany me to each appointment, but the counsel I retained was extremely effective, and best of all it didn’t cost me anything outside of money for postage. I was very lucky.
If you open your mail and read a letter sent by an attorney, how will you proceed?
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