Question

Sales tax

Forum|Forum|2 years ago
June 28, 2023
1 reply
0 views

If I am a sole proprietor and I make a gross profit that is positive but the sales tax puts me in the negative, can I pay less sales tax legally of I am responsible for the sales tax regardless of the net income?

Ask the Experts - Energy - June 2023

Andrew_W

Hi @Tayo 12,

Based on your question, I'm assuming that you are operating a business that sells items subject to sales tax.

Sales tax is separate and removed from income taxes in these cases. Essentially, you as the business are collecting the sales tax being levied by state/local goverment. These are not deductible business expenses and as such do not offset any business income. Generally, the state/local tax authority that handles sales tax in your jurisdiction requires the taxes to be remitted to them, regardless of your business' profit or loss.

Generally speaking, you should not include sales tax collected as revenue for your business, nor as a deduction against business income.

Hope this helps clarify for you!

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"