Calculating Total Sales – Credit & Debit in you Business

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Dear M & M:

I have the total amount collected that includes sales tax collected $11,250. How do I calculate the amount of total sales so I am not paying sales tax on sales tax? 

– Doug

Dear Doug:

To calculate the sales tax that is included in total receipts for sales items subject to sales tax, divide the receipts by 1 + the sales tax rate. For example, if the sales tax rate is 7.85 %, divide the total amount of receipts by 1.0785. Using the same sales and sales tax rates this is how you would calculate sales minus sales tax collected. If the sales tax rate is 7.85%, divide the total receipts by 1.0785. Example: total sales to include sales tax are $11, 250. When the tax rate is 7.85 per cent divide $11,250 by 1.0785 you get $10,431.15 or total sales minus sales tax. The sales tax to pay is simple to calculate and is a great check. Subtract total sales from the total amount minus sales tax ($11,250 – $10,431.15 = $818.85). Working the problem again to check your figures sales before sales tax $10,431.15 X tax rate 7.85 per cent would be $818.85. Add Sales Tax $818.85 to Sales before taxes $10,431.15 and you will get your original number $11250. As always check with your accountant, bookkeeper and CPA. Jeorge Bustamante from the Arizona Department of revenue is available to answer tax questions concerning sales tax in Arizona. He can be reached by calling (602) 542-8206 or calling 1-877-863-0655 or through the web site www.azdor.gov.

 -M&M

 

Dear M & M:

Is it a good idea to use credit card debt in your business?

– William

Dear William:

According to SBA from the office of Advocacy, credit card financing accounts for a small portion of small business capital; roughly 7 percent of all startup capital is derived from credit cards (includes per­sonal and business credit cards). On the other hand, credit cards are very widely used. A recent study by the National Small Business Association shows the percentage of small businesses using credit cards tops all other financing choices. In a tight credit market small firms’ use of credit card financing is likely to increase, especially for business expansion. Small business owners are more likely to carry credit card debt than other households (54 percent versus 45 percent respectively). With small busi­nesses relying about half on personal credit cards and half on business credit cards, the personal credit cards would be affected by the Credit Card Act of 2009. – SBA. Never comingle personal debt with business debt. Keep personal and business separate. Understand the terms and conditions anytime you use credit card debt. Are the rates locked in, can the loan be called, what happens if I am late on a payment?

-M&M

To ask your questions: Call the Small Business Development Center(SBDC) at Cochise College (520)-515-5478 or email schmittm@cochise.edu or contact the Sierra Vista Economic Development Foundation(EDF) at 520-458-6948 or email  hollism@svedf.org

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