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Nadia-Sweeten
Level 1

Do I need to separate Sales Tax on invoices I receive from Vendors?

Do I categorize sales tax differently on receipts from vendors for example, Home Depo, for materials verses Invoices from Vendors in which I am buying parts that will be used on products I sell?

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Best answer October 15, 2018

Best Answers
Michelle-Long-CPA
Level 4

Do I need to separate Sales Tax on invoices I receive from Vendors?

No you don't need to record sales taxes paid separately in the US.  Just record it with the cost of what was purchased (materials expense, office supplies, etc.).

When you purchase items for resale, you shouldn't pay sales taxes (provided you give them your exemption info).

I hope this was helpful.

View solution in original post

2 Comments 2
Michelle-Long-CPA
Level 4

Do I need to separate Sales Tax on invoices I receive from Vendors?

No you don't need to record sales taxes paid separately in the US.  Just record it with the cost of what was purchased (materials expense, office supplies, etc.).

When you purchase items for resale, you shouldn't pay sales taxes (provided you give them your exemption info).

I hope this was helpful.

View solution in original post

CapricornConsulting
Level 1

Do I need to separate Sales Tax on invoices I receive from Vendors?

If you purchase items for resale that you do end up paying sales tax on, break out the tax into an expense account such as "Purchase/Use Tax",  then when you prepare your sales tax to be paid you run a report for that expense account and take it as a credit on your Sales Tax return.  You can save the report as a pdf file and attach it as proof when you file the sales tax.  That is how we do it in NY at least.

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