Sales Tax and Pricing

Pricing the goods and tax.

Later we will discuss the bottom line and finer points of how to price goods so as to make a profit. I have been told, many times with great conviction, that when it comes to arts and crafts, "you" should not expect to get paid for your time. I beg to differ. I will not say just how much we make when working but it is more than 5 times minimum wage. But I digress.

If you are selling where the government levies a sales tax you probably are obligated to collect it. The first thing you need to know is do they collect tax in the locality where you intend to sell. If you do not know check with the promoter. If you do not live in the state you may be obligated to secure a tax certificate for that state. The laws and tax percentage change from area to area so you may need to do your homework. It never fails that someone will be asking around, how much is the tax?

There are 2 ways to collect tax.
1. Figure the tax for each sale and collect it separately.
2. Include the tax in the price of the item.

We always include the tax in the sales price. This does not mean we pay the tax. Rather we take the usual price, which for a show may be a bit less than on the website or retail, then we figure the tax amount. We add the tax to the price of the item and round the price up to the next higher dollar. This way we do not loose money, and the customer pays about the same as if we had figured the tax on top of the sale. When we are very busy we do not have time to monkey around figuring tax and making change. We have seen people with cash registers handing out dimes and nickels while customers passed the booth because the vendor was too busy.

We do this for the convenience and simplicity of making even money change. That is all paper, no coin. We do not wish to spend any more time making change than absolutely necessary, especially when there are 3 people waiting. We need to get them sold and out of the booth so others can buy. Obviously it is not always that busy but when it is we simply do not have time to goof around. And we want to be sure the change is correct. It is bad to short change a customer and worse to short change yourself! We know of fudge vendors who sell constantly all day and they do not have time to fiddle around making change. Not to mention it makes counting the money at the end of the day much easier.

We only need paper money and it makes accounting very easy. However, we do have a price list showing the price of the items and the amount of tax that brings it to the dollar total.

Here how to figure sales tax for this method.
Say you want the final price, including tax to be $20.00
And say the sales tax in the area is 7.75%
Take $20.00 and divide by 107.75% = base price Difference, or $1.43 is the tax. You may be off by a penny but it is very close.

We keep an inventory and mark the sales down so we know how much we sold. We also count our "bank" which is a wad of money in our pockets.

When in high school I worked at a gas station and we started the day with a $50.00 bank. It was a combination of 1's 5's and 10's folded in half and carried in the pocket. This is a really efficient way to make change. We never have to fiddle with a cash box or cash register. We start with a bank and count it at the end of the day, comparing it with our list where we keep track of what is sold as we sell it. 1's on the outside, 5's on the inside and larger bills like 20's and 50's under the 5's. When the bank gets too big we count some out but we make sure to keep track so we can have a good accounting at the end of the day.

When making change never put the customer's bill away until the change has been given. If you are right handed you can hold your fold of money in your left hand. Call back the denomination. For example if you are given a $20.00 bill for a $10.00 purchase you might say "that's ten dollars our of twenty" , then count back the change. Hold the customers bill in the fingers but not folded into the bank. Another way is to put the customer's bill on the counter under a weigh of some kind so it can not blow away. Count the money back carefully so they know they are getting the right change. When you are done fold your bank and return it to the pocket where you keep it. The only problem we seem to have with this method is our fingernail cuticles can be pressed back from continually reaching into our pocket.

Some vendors use a carpenters nail apron to hold the money and others use a cash register or cash box. Which ever method use it exclusively every time. Don't try to keep some money in a cash box and some in your pocked. This is not to say you should not have money in reserve or cash fund or you should not stash some of your bank when it becomes too large to handle. If you need more change then "buy it" with bills from your bank so your count will be correct at the end of the day.

Naturally extra money must be kept in a secrete and secure place. We often break the extra money up into several "stashes" incase one should be lost somehow. If you decide to make exact change you will need to keep a cash box or a cash register to separate the coins. There are battery operated cash registers on the market and we have seen people who use a 12 volt battery and a 110v inverter.

Next >> Handling money