How to Calculate on Tax Products

Calculating on tax products is vital unless you are doing business in Alaska, Delaware, Montana, New Hampshire or Oregon as they all only pay taxes on prepared food. The other 45 states have to pay sales tax on all products purchased. Some states have a general tax, while others have a set sales tax.

1. Divide reciepts by 1+ the state's local tax rate.


2. Example 1: A greeting card store only sells general taxable items, no food.
   *  Gross reciepts for the month is $10,285.50. Assume the sales tax is 8.25%
   *  R=actual sales
   *  T=actual sales with sales taxes
   *  T=R*1.0825
   *  $11,134.05=10,285.50*1.0825


3. Example 2: A coffee cart sells $7,128.31 in one day.
   *  R=7,128.31
   *  7.0% sales tax on prepared food
   *  $7,627.29=7,128.31*1.07


4. Calculate taxes according to a percentage of a dollar. If the tax is 6 percent (of a dollar), then you are paying $1.06 for that item.


5. Calculate business taxes for deposit into the sales tax payable account, round up to the nearest full dollar. This adds padding into your account in the event there is a miscalculation or sales items sold are were not notated in the daily ledger.


6. Verify the daily sales ledger with the general ledger. Make sure both ledgers match.


7. Figure 1.xx*gross receipts.
   
   

• Balanced books should have a little extra padding in the sales tax payable account.


• Tax write-offs are a benefit of keeping accurate sales records and paying sales taxes. You can write off sales taxes at the end of the year.


• Sales taxes are used to fund for schools, highway improvements, community services, parks and recreation and road signage.