Paypal for customer payments?

Just know that, if you do over $20,000 in sales, they’ll send you a 1099 and report it to the IRS. That, combined with the new bullshit tax law requiring state taxes to be paid for online sales, it’s becoming a real chore to sell things on the “up and up” online.
Click to expand...
I wonder if one could use multiple PP accounts in order to dodge the 20k threshold.

I dont do PP, so its details elude me. Anyway, I wonder how they can decide if the money is ”income” or for example a reimbursement.
But I suppose if they report to TaxMan, then its up to the PP user to convince the TaxMan what the money is classified as.

Anyway, my buddy sells all his stuff thru PP. never mentioned anything troubling about it.
The stuff I sell goes for cash in person, or check if I already know & trust the buyer.
 
Lieblad said:
I dont do PP, so its details elude me. Anyway, I wonder how they can decide if the money is ”income” or for example a reimbursement.
But I suppose if they report to TaxMan, then its up to the PP user to convince the TaxMan what the money is classified as.
Click to expand...

There are two distinct categories.....Goods & Services (self explanatory) and ensures the seller against most shenanigans by shysters trying to double dip on a sale. There is a charge to the seller up front when the money is collected by PayPal. I would consider this type of sale to be Income.

Second category.....Friends & Family...This is the one most ABUSED by Sellers wishing to Dodge the Charge for PayPal services when selling a PRODUCT....Friends and Family was meant as a way to send money to a family member in dire need or a friend for Bail Money and not be subject to a charge for a "Friendly" gesture for someone in need of quick cash. The DOWN side is that the seller will forfeit protection of a scammer claiming they received an empty box and PayPal tends to side with the Buyer and force the seller to refund the money!!!
 
Rick Marchand said:
In Canada, the appropriate tax rate for the Province I am selling to, apply. Example... if you live in SC and sell to TX, you have to charge your customer TX sales tax. That just makes sense, doesn't it? Am I missing something?
Click to expand...
Rick the problem I see is knowing what to charge. Here in North Carolina I can drive into the next couple of counties and there will be 3 different state sales tax rates. I am going to have to look up the tax rate for the county where you live and figure the tax and at the end of the quarter I am going to have to fill out forms for each state and buy a stamp to put on each envelope. This is going to be complicated I think.

As for Paypal ,friends and family are the root of most problems.
 
There are different tax rates for separate Counties within a single State? If so, that takes the wind out of my next few remarks... and I pity you.. lol. Yikes!

Complicated sales is part of the business. If you are making enough to qualify as a business, it's a business... lol. If you are pulling in 20K from Paypal and can prove that you are spending just as much on knives, I don't think the Gov't is interested in you.

By no means am I a fan of handing over the government my hard-earned money. Do all you can to make it work in your favor. I file my taxes and try to squeeze every drop of write-off potential.

But... I think discussing how one can avoid the taxman with multiple accounts and whatnot, is tantamount Tax Evasion and is probably frowned upon by the Admin.

Rick
 
I copied this from a quick google search - County and local taxes in most areas bring the sales tax rate to 6.75%–7% in most counties but some can be as high as 7.5%
 
I use it almost exclusively for any items I’m not selling gave to face for cash or otherwise. I always pay the fees and use goods and services (even if the buyer offers f&f). Never had an issue, and when my PayPal debit card # was stolen, PayPal very quickly refunded the charges to my account, canceled the card, and sent me a new one.

I don’t particularly appreciate their stance on guns and selling “weapons” can get a bit hairy if your not careful, from what I hear, but they’re the biggest and best of what very little is available right now, so it is what it is.
 
Rick Marchand said:
Makes sense... it is an income.

In Canada, the appropriate tax rate for the Province I am selling to, apply. Example... if you live in SC and sell to TX, you have to charge your customer TX sales tax. That just makes sense, doesn't it? Otherwise, you are bypassing taxes all together... which would be unfair top local businesses who are required to apply state taxes on sales.
It's no different than mail-order, right? Am I missing something?
Click to expand...

Pretty sure you will have to file taxes in every state you sell a knife to. So if you sell 20 different knives, to 20 different customers, in 20 different states, then you’ll have to file 20 different tax returns in each one of the states your customers are in. It’s big time BS. It’s going to be a real pain for small businesses.
 
Worse here in Kali. Even cities can and have added to the sales tax. So you have dufferent rates for folks in the same county but different towns.
 
I see how that could get complicated... man.

It is very easy in Canada.... Sorry... lol.
 
Rick Marchand said:
Makes sense... it is an income.

In Canada, the appropriate tax rate for the Province I am selling to, apply. Example... if you live in SC and sell to TX, you have to charge your customer TX sales tax. That just makes sense, doesn't it? Otherwise, you are bypassing taxes all together... which would be unfair top local businesses who are required to apply state taxes on sales.
It's no different than mail-order, right? Am I missing something?
Click to expand...

It MIGHT be an income

In your case, yes it's business income.

If you're just selling off your collection, your shop tools, used car, or used clothes or whatever - it's no income it's just disposal of your stuff.
CRA calls it PUP Personal Use Property

------------

If the stuff you sell is low dollar and you can afford to lose it, paypal is convenient.
People are used to it now and you may lose sales if you don't have it.

Square is an alternative

But PP can and do lock and seize funds for half a year at at time.
especially if it's "weapons" related -
It seems that they do that as a matter of habit too for cash flow reasons.

If there's a dispute - sellers are usually on the losing side.
 
Since the discussion has moved towards sales taxes it's good to remember just what the US Supreme Court ruled on...some quotes from USA Today Newspaper...June 21, 2018:

"The ultimate impact of the ruling remained in doubt, and lawyers for online retailers warned of future lawsuits to determine what businesses and consumers will have to do. The ruling only directly affected South Dakota, which had sought to collect taxes from online retailers with more than $100,000 in annual sales or 200 transactions in the state."States would be well advised not to try to go further than South Dakota did,” said former U.S. solicitor general Paul Clement. “If a state deviates from that model, they’ll be asking for trouble."

"Faced with the South Dakota law and its exemptions for the smallest retailers, the justices nevertheless opened the door to states that may want to collect sales taxes from a larger number of sellers. Kennedy said Congress or lower courts could step in to referee those situations.

"If some small businesses with only de minimus contacts seek relief from collection systems thought to be a burden, those entities may still do so," he said. But the potential for problems, he said, "cannot justify retaining this artificial, anachronistic rule that deprives states of vast revenues from major businesses."

There's very solid arguments on both sides, brick and mortar vs online retailers but I'm not sure how much of an impact it might be on the custom knife community, unless you are quite productive or selling in your own state maybe? Dealers however may have much more of an issue. Just my two cents.

Link Here: https://www.usatoday.com/story/news...llows-sales-taxes-online-purchases/699556002/
 
JG Custom Metal Works said:
Just know that, if you do over $20,000 in sales, they’ll send you a 1099 and report it to the IRS. That, combined with the new bullshit tax law requiring state taxes to be paid for online sales, it’s becoming a real chore to sell things on the “up and up” online.
Click to expand...
That law doesn't generally apply to little guys like us. Check with your accountant, but that's the way it was presented and discussed by the people I listen to.
 
Services are not taxable in many states. I think NY taxes services. An easy way to know is if you pay tax for a haircut, you live in a commie state. So you should only be paying tax on the materials.

I am not a tax professional.
 
Thank you all for the replies. I asked the customer for a USPS money order but they are having trouble getting to the post office and asked if they could Paypal me. I told them Paypal would be fine and to use the goods and services option. I have used Paypal before for out-of-country sales. So far no problems but I don't sell nearly as many knives as a lot of you.

I am in NY. Sales tax rates vary from county to county. My accountant told me I don't need to charge sales tax for out-of-state sales. I thought I remembered reading somewhere that I needed to charge sales tax for the destination of the item. I will need to research that more.
 
JG Custom Metal Works said:
Pretty sure you will have to file taxes in every state you sell a knife to. So if you sell 20 different knives, to 20 different customers, in 20 different states, then you’ll have to file 20 different tax returns in each one of the states your customers are in. It’s big time BS. It’s going to be a real pain for small businesses.
Click to expand...
No...This is not correct. As a Business you collect taxes in the State and County where you reside when the item is SOLD IN STATE there may be different cities within that County with different rates however you only charge the rate where your business is located. When you pay your business tax to the state revenue service it's calculated on gross revenue at your location. Think "Brick & Mortar" store if a customer walks in you charge LOCAL tax on the price of merchandise they purchase not on where they are from....If you ship the item OUT OF STATE no tax charge is applied in most cases....Amazon never charges me tax for example.
 
Robert Erickson said:
I've not had any issues thus far.
If you sell a Damascus knife make sure they don't put the word Damascus in the memo line. It gets flagged and delays payment.
Click to expand...

Why would it get flagged and delayed if you are doing the transaction goods and services? I'm gonna have to try this now lol. I use PP for my business and they should have no issues w/ this. That's one problem w/ them though, they are so big it's hard to make any changes.
 
razor-edge-knives said:
Why would it get flagged and delayed if you are doing the transaction goods and services? I'm gonna have to try this now lol. I use PP for my business and they should have no issues w/ this. That's one problem w/ them though, they are so big it's hard to make any changes.
Click to expand...

It is a trigger word and flagged due to terrorism.
 
Josh I think it has to do with keeping money from going to terrorist. Using pattern welded avoids the problem from what I read.

Busto you are correct that right now you only collect sales tax for your state but it wont be long you will have to collect it nation wide.
 
Spalted said:
Josh I think it has to do with keeping money from going to terrorist. Using pattern welded avoids the problem from what I read.

Busto you are correct that right now you only collect sales tax for your state but it wont be long you will have to collect it nation wide.
Click to expand...

Thank! Yeah good point on the sales tax... Check this article out

"On June 21, 2018, the United States Supreme Court fundamentally changed the rules for collection of sales tax by Internet-based retailers..."

I checked w/ my CPA this morning, they are still trying to interpret the ramifications but he said at this point the way he understands it is that you will have to collect sales tax based upon where your purchaser is located. This basically includes around 7,500+ tax districts all over the US. This is going to be a mess and I hope something gets figured out for small businesses!
 
I still can't wrap my head around how it's constitutionally justified that people from one state are somehow liable for obeying the local laws in another state, county, city, rather than the individual living there. Go go interstate commerce clause. We can justify anything :confused: Cause it has nothing to do with rule of law and everything to do with businesses simply being easier to extract tolls from, vs individuals.
 
You must log in or register to reply here.
Back
Top