(NOTE: This post was written in 2012 and the tax rates and form appears to have changed significantly since then.)
February has arrived and it’s time to do January’s ST-9!
Although the Sales Tax payment isn’t due until the 20th, I’ve found it’s always easier to do it on the first when I do all my other end of month accounting.
I’m blatantly ignoring the fact that I didn’t sell anything in January, since Virginia requires that the form be filed regardless of if any tax is owed. Woo.
Anywho, let’s break this thing down!
Disclaimer: I am not a tax specialist! I am simply going off of the instructions provided by Virginia and doing my best… when I can afford a tax accountant to look things over, I’ll come up back and update this (or if I run into problems). For now, please read the instructions yourself (see link above) and draw your own conclusions.
Step 1 – Collection
Step 1 is the actual collection of the sales tax, which would have happened when I invoiced an order in January. Since I didn’t sell anything, we’ll have to pretend.
So let’s use Poptop, who is listed for $25.13 with a S&H of $5.10. (Yes, I have to collect tax on the S&H. I think it’s stupid too, but alas.)
Assuming he sold to someone in Virginia I would have collected $1.51 from the buyer which is 5% (4% State, 1% Local) of $30.23. I think Etsy might turn this into the state themselves, but I need to get a sale so I can check. *pokes store*
If I had sold the same horse to someone outside of Virginia they wouldn’t have to pay sales tax, but they would be responsible for self-reporting and paying their own state’s sales tax themselves. Which no one ever does… except on large purchases like boats/cars/elephants, at which point the state sends you a nasty letter telling you to fork it over.
Mind you, if I sold the horse to someone who lives in Maryland, but the sale physically took place in Virginia (at a Live Show, Craft Fair, etc.) then I would collect the sales tax.
Step 2 – The Worksheet (ST-9A)
So the sales tax is collected and sitting in the bank account (in theory)– time to fill out the form!
In a sane universe I would be able to do all of this online, but Virginia won’t let you unless you have employees. I’m tempted to get the FEIN number just for the convenience. *sighs* (Submitting the ST-9 Online)
Line 1 (Gross Sales) is the total of everything I sold this month, taxable and not taxable, but not including the sales tax.
Line 2 (Personal Use) is the amount of materials I bought with no sales tax (the bodies) that I took out of inventory for my own personal use. I do this sometimes when I end up with a custom that I want to keep for the Home Herd instead of selling.
Line 3a is for the tax exempt sales, which is where I put the sales for all my non-Virginia buyers.
Lines 3b and 3c deal with refunds to the customer for sales that I collected sales tax on (but not including the sales tax in these totals). It’s assumed that the sales tax was refunded, and therefore I don’t owe it to the state.
- 3b is for refunds on items I sold in January that I refunded
- 3c is for refunds on items I sold prior to January that I refunded
Line 3d is for Bad Debts – people who owed me money and never paid (and thus I never got the sales tax from them)
Since I am using Accrual and not Cash accounting (because of the inventory) I have to report the sales when I make them, which isn’t always the same month I get paid in. This line is for sales that I made in previous months where the buyer flaked out and never paid. It’s the same as 3c, only I never got the money to start with.
Line 3e is for “any other deductions allowed by law” and I haven’t ever used it.
Line 3 if I’m unlucky and I end up having more deductions than sales, I only get to claim up to the sales total– the rest will have to roll over into the next month’s form.
Line 4 (Total Taxable State Sales and Use) is how much I owe taxes on (which will never be a negative number!)
Line 5 (Food Sales) deals with food, so I can skip it.
Lines 6, 7, and 8 are straightforward calculations of the tax.
Line 9 (Dealer Discount, ST-9A) This is a discount given if you pay your taxes on time.
Line 10 is just math.
Line 11 (Prepaid Wireless Fee) is for cell phones, so I can skip it.
Lines 12 through 15 are just math.
Step 3 – The Check is in the Mail
Now that the worksheet is done, all I have to do is copy it over to the ST-9 and mail it in with the check!
And assuming I did the collection correctly in Step 1, the only time the sales tax will come out of my own pocket would be for sale I am waiting on payment for (checks, money orders, procrastinating e-payment folks, etc.).