How to account for sales tax paid at time of purchase of resellable supplies
Background:
I am a photographer selling prints.
I Purchase ink and paper, then sell the final product to customers.
I pay sales tax on ink and paper at time of my purchase.
I collect sales tax for the entire sale price of my artwork since I am not providing labor.
Question:
In what account do I accumulate "Pre Paid Sales Tax" prior to sale of resellable items? How do I transfer this ammount from a vendor purchase to a sales tax payment?
I have already paid a portion of my sales tax liability, so when I complete final sales tax filing, I fill in line 14 (form 401 EZ) with the ammount accumulated from the purchases already paid.
Does this make sence? In the idealistic world i should not pay tax at time of purchase, however the geniouses that run the stores don't know how to withold sales tax even after filling out all of the paperwork with my resale #ETC and i end up spending hours with management.......long story.
I would appreciate any insight.
will, Owner Small Business, CA
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