To tax or not to tax….that is the question. At least, in the world of Paparazzi Accessories consultants, that question comes up quite a lot!
Honestly, charging your customers more than $5 to recoup the sales tax you have already paid to Paparazzi Accessories when you purchased your inventory (which they, in turn, send off to your state on your behalf), is entirely your decision.
Where I live in Tennessee, our local sales tax is 9.5%. That means I pay $0.48 per piece of jewelry I purchase, lowering my profit to 35.5% instead of 45% if I choose not to charge sales tax.
As a result, if I choose not to charge the tax back to my customers by making each piece $5.48, I have to sell more jewelry to realize the same profit amount.
I know this can be all kinds of complicated, so I create a little spreadsheet below where you can actually input your local sales tax rate, and then also input the amount of profit you would like to have in a dollar amount.
The spreadsheet will show you how much your tax is per piece, what you are paying per piece, and how many pieces you need to sell WITH and WITHOUT sales tax in order to achieve that profit amount.
Give it a try! (if you mess up, just refresh this page….it will reset the table below.)
On the form below, you can enter values in the sales tax line, and in the desired income line (those are the yellow highlighted cells)! The rest of the form will automatically calculate for you!
If you find this helpful, please share this post with your team!
Leave me a comment with any questions!