Hey guys, I've had a full day of dealing with the government and I need some help. I think I need to talk with a CPA here in town but here is my question (or multiple questions, rather) for you, the community at large.

How does a CPA work?
Can I just go in and ask them a bunch of questions for free?
Do they charge by the hour?
What if I don't want them to do anything for me but answer tax questions (I'm doing everything myself...just need direction)?
Is a CPA the one I really need to talk with?

(The main problem I'm having is trying to figure out how many counties, cities, states, etc. that I need to have a business license in. I'm a performer AND have a small magic store. Next question would be how to go about paying my sales tax on the store. I'm trying to get everything setup online right now but it's killing me... Anyway, I think a CPA would be worth the money if that is the person I need to speak with. The government just says "Sure, you need to pay us" no matter what I'm asking. lol. The problem is that I perform all over North Alabama and several other surrounding states and it's getting ridiculous to ask for licenses in every state, city, county, etc. when I may have only one performance there. I'm going to go bankrupt if this keeps up!)

Yes, you need to speak with a CPA, and he is the one with the knowledge. Yes, they charge for their time, just like an attorney. They can set up your bookkeeping for you as well, for a fee.

If you have a physical store, and have a license to do business in your town, then that is all you need, as you will run all that business out of that store. It is like magic dealers that go to magic conventions all over the world. They are doing business out their home business.

As far as sales tax is concerned, you do not have to collect sales tax on sales out of certain states. You do have to collect sales tax for all sales in your state. So when you cross the state lines, it all depends on the state laws of that state. If you have made any purchases on line, you will have noted that some states want their sales tax even if you are a business in your state. This is growing due to the Internet. As when people buy an item out of state, they are suppose to add up all their out of state purchases and send in the sales tax for those purchase at tax time. Anyway, that is how Indiana wants their residences to pay the sales tax.

So have your questions written out, and take notes when you see a CPA for advice. Hope this helps you a little.

Now if you do not have a building, but an Internet store, that is a different situtation, and I have no idea about this, I don't think you even need a license to have an Internet store.

Thanks for your response. I def. will visit a CPA now.

Nope, no brick and mortar store. I bring my store wherever I perform. And it's also online. But wait...what if I sold a $2 magic wand to one person in every state. Does that mean I'd have 50 different returns to file?! Do I now owe sales tax to 50 different states?! There have got to be limits here or something. My business is so small that I will only net a few hundred bucks for the whole year on my store. VERY small. I'm not going to net anything if I have to keep buying licenses. Basically it'll actually shut down my store.

You keep mentioning licenses, I don't know of any internet store that requires a license. File a return? No, just send the sales tax to the states that require it, on their forms. As I said, there are only about 5 states that require that, so far.

Please re-read my post as I think you missed some points.

Right now you are required to pay Alabama sales tax and income tax. That is if you sell to a person that is Alabama.

No you don't bring your store where you are, your store in on the internet, and being you live in Huntsville, that is your business address if you are a proprietor. There are kinds of business types and now you age getting into law and that requires the advice of a business attorney.

That all depends on the amount of income you project for a year. If it is in the hundred of thousands of dollars, then see an attorney.

No, I understand I do NOT need a license for an internet store. The problem is when I'm selling merch. after my shows. Then I'm considered a transient vendor/dealer or whatever. Supposedly this DOES require a license in every single place I go. That's what EVERYONE in the gov. I'm talking to is telling me right now. I guess it sort of makes sense but there's got to be either a "global" license that covers me for the whole state or something...OR there should be a minimum amount I need to make before requiring a license. Neither of these seem to be the case.

Matt -

I would get advice from a professional. Not here on The Magic Café.

That's what I did when I wanted to know about the legalities of selling merchandise BOR at shows.

Also, with your reasoning, that means that people who set up a table at a flea market, or garage sale, or festival have to get a license and pay taxes on their sales. That may not be true.

Again, talk to a professional.

- Donald

CPA's typically charge by the hour or for tax returns by the form. Look for a local CPA or CPA firm. You want to find one that is a member of the AICPA (American Institute of Public Accountants). You can also check on the Alabama State Board of Public Accountancy website to verify that the person you are working with does indeed have a license. I believe that the state board website's also have a search function to help you locate a CPA.

I believe what you are referring to above is "itinerant vendor". This can get tricky. Without getting too technical there are generally more convenient ways to go about doing business than getting a license in every city/county. Every state is different and a CPA familiar with Alabama law can give you good advice.

Sales and Use tax is also tricky. Generally speaking the state collects the sales tax on behalf of the city/county and then distributes it to the county on your behalf. You do need to know how much to collect for each city/county, but this info is easily available online. Most states require Sales/Use tax returns monthly; however, there is usually a provision allowing quarterly or yearly filing if your sales are below a certain amount.

I have a BS in Accounting and this May I will have my Masters Degree in Taxation. I have worked in public accounting and currently work in the tax department of a $3 billion dollar company. I can probably provide some additional guidance especially in locating a qualified CPA. If you want to talk further, send me a PM.

Matt, I feel for you. The more questions you ask the more taxes you going to pay.

Good advice by all above.

I too am not sure you need a business license unless you doing business under a different name other than your own.
If you calling yourself a company, you will need to register the name at the courthouse. They do charge a small fee for that and will give you a certificate to hang on the wall. You then have to renew it annually.

The license fee amount depends on the type business and the projected income amount. Way back when I owned my small
magic/novelty shop, seems like it was about twenty-five dollars. Probably more today, (I pay way more for my non magic business permit) but still a small novelty store today should be reasonable.

Yes a CPA is the one you need to talk to. But let me warn you. He is going to suggest that you get a Tax ID number.
If you selling product of any kind, Alabama wants you to collect sales tax.

If you have a brick and mortar store the tax number is free. This number also allows you to collect tax money while selling at shows,
festivals, etc. You simply count it in as store sales. It's only good for Alabama oh.

Here is the problem: It's a little different when you working out of your home, because it's harder for the state to just come in and seize the business if you fail to pay the taxes. You will most likely have to put up a cash bond, or buy a surety bond.

A wild guess, for a very small business: Three to five hundred in cash, or you can get the bond from your local insurance agent for around seventy-five dollars per year.

While I still do my own end of the year taxes, I do employ an accountant, a CPA, to do my weekly payroll taxes for my non magic business. She charges a monthly fee. She doesn't charge extra to answer questions but does charge extra for extra paper work. So I would think a CPA would simply answer any basic questions you have about setting up a business for free if they thought you were going to employ them. They won't charge anything to ask the fee.


I also suggest you talk to any local small business owner. The magic business is really no different when it comes to getting local permits, taxes, etc. Walk in a small store and ask the owner where they got the permit hanging on the wall behind the cash register.

If I can help, let me know.


Tom

Matt,
Donald gave the best advice. Ask a professional! Instead of asking folks here on the Café (who come from different states than you, with different laws than you) just ask someone who specializes in business tax in your state. If you're very concerned about the legality of your operation, you need to speak with an attorney as well.

Best Wishes!

Yes by all means, do talk to local professionals.

And better yet, get it straight from the horse's mouth here:
http://www.co.madison.al.us/about/org/Co......ss.shtml

Those are the people that will actually issue the permits in your area. They should know too.

Still, don't completely rule out the things said on here. Knowing a little beforehand will help in asking questions.
Lot of good people on here already doing what you wanting to do.

Most do just end up hiring a CPA and not worrying about it themselves.
Not always the cheapest or the best, but certainly the simplest.


Tom

When I worked for a magic dealer that had a brick and mortor store, we traveled all over the place, many different states. We sold at magic conventions and all these sales were handled just like we were selling mail order from the store on out of state sales. Magic Conventions are private events, so we did not sell to the general public.

Having a web store, may be your solution, but you really can only talk to qualified person to get the proper answer. I agree that you simply calling your local tax offices and trying to get answers is not the solution, unless you can get the laws in writing from them. Remember in the end, not knowing the actual law is no excuse for breaking the law in the laws eyes.

You could consult with Steve Snyder, the tax magician http://www.thetaxmagician.com he is a great guy and very knowledgeable.

Yes, Steve can be a big help.

A business person really does need to learn all he can about the tax end of the business.

Like they say, It's ok to trust, as long as you can verify.

Tom

Thanks guys. Take-away? Go talk to a tax person. I'm on it! Thanks again.