momtohaley2004 Posted January 26, 2008 Share Posted January 26, 2008 A lady contacted me from my website and come to find out she lives in the same town as me. She is currently a distributor for another at home candle company but is unsatisifed. She wants to start selling my candles BUT she doesn't have a tax ID/sale tax permit. So, I'd have to collect taxes from her until she got her permit. That's not what I was wondering. I am wondering how you would handle a case like hers........would you sell wholesale plus tax prices to her and let her resale at whatever price she wants? She moved here from Houston so her customers would be in the Houston area not her. OR would you set her up as a sales rep where she purchases a set amount of product from you and then gets a percentage of the sales. I've never had this occur so I was wondering how everyone else would handle a case like this. To me she is just a promoter or sales rep, but I'm not sure if I should wholesale and let her resale or give her a percentage of her sales. What would you do if in my shoes? She is already offering credit card upfront for purchases she wants to make. I just don't want this to be someone wanting to purchase my products cheap although she has already inquired about a somewhat large order. What would you guys/gals do? Thanks for the input and please tell me how you handle sales reps if that is how you'd do it. Thanks so much. Quote Link to comment Share on other sites More sharing options...
cindym Posted January 26, 2008 Share Posted January 26, 2008 IMHO I would wholesale to her. Set an order limit. 100 or so per order. Make sure she has a liscense to do retail sales. For each wholesale account I have in my state, I have to have in my possesion a form filled out from them with their tax id number. Check the laws in your state on this. I dont think you want to take her on as an employee, but if you do then that wll require more work for you. Quote Link to comment Share on other sites More sharing options...
MissMary Posted January 26, 2008 Share Posted January 26, 2008 I wouldn't do the employee thing either. You'll end up having to report taxes on her wages, get certain other insurances and so on and so on. You can have an "independent contractor" where she must report all her earnings and such on her own, instead of actually taking someone under your business. Quote Link to comment Share on other sites More sharing options...
VerticallyEnhanced Posted January 27, 2008 Share Posted January 27, 2008 I would insist that she gets a tax permit. By law in Texas, tax is due on the retail price of the candle, and SHE would ultimately be charging the actual retail price. would you sell wholesale plus tax prices to her and let her resale at whatever price she wants?In the above situation, tax is not being collected on the total consideration of the item.In the state of Texas, sales tax permits are free. They are easy to apply for:http://www.window.state.tx.us/taxpermit/After the person obtains a sales tax permit, then I would sell wholesale. You have to get a copy of a properly completed resale certificate from the purchaser including her taxpayer number and all other required info. If you accept the certificate in what is called "in good faith", then you are covered in the event of an audit. Bottom line...I would not touch a sale for resale without a tax payer ID number. You can also look up Texas tax payers numbers on line:http://ecpa.cpa.state.tx.us/vendor/tpsearch1.html Quote Link to comment Share on other sites More sharing options...
sockmonkey Posted January 27, 2008 Share Posted January 27, 2008 My advice--steer clear of her. There are too many red flags here. The most problematic one is that she doesn't have a license to do business. If she's serious, she would have one. Otherwise, she's nothing but a tax cheat, which robs everyone. The second concern is that she is "unsatisfied" with the other candle mfg. That may be code for, "they wouldn't sell to me anymore", and you can bet there's a reason why, which she isn't about to tell. I would contact the other company and see what they have to say about her.Ask her some questions, like why she doesn't have a tax ID. Ask her what kind of volume she did with the other company. How long has she been acting as a distributor? How much is she prepared to invest in your candles if she's willing to be your distributor? Quote Link to comment Share on other sites More sharing options...
momtohaley2004 Posted January 27, 2008 Author Share Posted January 27, 2008 I sent her a response stating that I will not sell to her at any price other than retail until she gets a tax ID. I will also collect tax from her at that time. Quote Link to comment Share on other sites More sharing options...
adillenal Posted January 28, 2008 Share Posted January 28, 2008 I sent her a response stating that I will not sell to her at any price other than retail until she gets a tax ID. I will also collect tax from her at that time.I am not sure I understand your statement, "I will also collect tax from her at that time." If you are selling to her wholesale wouldn't she collect the retail sales tax? or were you referring to selling to her retail? Quote Link to comment Share on other sites More sharing options...
momtohaley2004 Posted January 28, 2008 Author Share Posted January 28, 2008 I am not sure I understand your statement, "I will also collect tax from her at that time." If you are selling to her wholesale wouldn't she collect the retail sales tax? or were you referring to selling to her retail?Sorry for the confusion.........Yes, I will charge her retail and collect tax from her until she gets a retail sales tax permit. She will be a regular customer until she gets a permit. Once she gets a tax permit I will wholesale to her. Quote Link to comment Share on other sites More sharing options...
momtohaley2004 Posted January 29, 2008 Author Share Posted January 29, 2008 After I emailed her the information and a link to the website where she can sign up for a wholesale/tax permit in TX, she went and signed up with no issues whatsoever. Her permit will be here in 2-3 weeks. She wants to wait til her permit comes in and then make her order. she has placed her order, but won't pick it up until she gets her permit. I won't make the order either until her permit comes in.(although most is in inventory already). So, this way I'll be doing it the legal way and she's responsible for all her reporting. She can just be an independent sales rep I guess you can call her. She won't be an employee cus she will buy the product wholesale and then resale it on her own and report the taxes, etc herself off what she sells. Quote Link to comment Share on other sites More sharing options...
CareBear Posted January 29, 2008 Share Posted January 29, 2008 In my state it takes 15 minutes to register with the state and an email with the tax ID number. I'm glad she came through and acted responsibly.Not only is it the right thing to do, but it keeps things simple if you just follow the rules... Quote Link to comment Share on other sites More sharing options...
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