Saturday, March 21, 2009

You're Not Supposed To Sell Anything Without A Sales Tax Permit

About a month and a half ago (Feb 6th to be exact) I officially entered the world of confusion known as running a business.

To briefly refresh the memory of my regular readers and to enlighten my new readers, I set up a small sole proprietorship to sell my self-published novel, called "Books by George", last November.

Anyways, I called up the Dept of Revenue Service here in Connecticut to find out what forms I needed to file to pay my business income tax. Within the span of a couple of minutes of talking to the service rep, I found out to my chagrin, that I wasn't supposed to be selling my book without a sales tax permit (hence the title of the post). In Connecticut, you must charge and collect sales tax on anything that you sell, which currently stands at 6%.

Being the business neophyte that I am, I told him honestly (and truthfully) that I didn't know that I needed a sales tax permit in order to sell my books. After a fascinating five minute lecture on his part, during which he politely told me that I was a screw up, I got the information that I needed in order to register my tiny little business with the state of Connecticut and get a sales tax permit.

So when I got home, I went to the addy that he noted,, and started the process of getting a sales tax permit. I didn't get too far as on the first page, it asked me for my Federal Employer Identification Number. Naturally, I didn't have one. So I called up the IRS at the 1-800 number I was given, and I was soon on my way of experiencing what I usually inflict on everyone else.

After spending twenty minutes on the phone with a very helpful customer service rep, I had my FEIN. I then asked her a simple question, which was "do I file my business taxes at the same time I do my personal?"

She said that she was sorry, but that she couldn't answer my question. However, she would be more than happy to transfer to someone who could. I said, "okay."

Five minutes later, I was transferred to someone else. No sooner than I got my question completely out of my mouth, I was told I that I was in the wrong dept. and that he would transfer me elsewhere. I said, "okay."

Five minutes later, I was transferred to a very nice lady in the collections dept. (no I don't know why the collections department), who after answering my question, asked me why I was transferred to her dept. I gave her the one minute version, and she was kind enough to tell me that in addition to filing a schedule C, I had to file another schedule for self-employment taxes.

Once I got done with that, back I went to the previously mentioned website and spent the next ten minutes registering my business (such as it is) and getting my sales tax permit.

Now I'm an officially registered business entity located in the state of Connecticut, ready to collect what meager sales tax I have to charge for my book. Since I already have a stated price for my book, I'll have to tweak the price so as to accurately reflect the sales tax that now must be included. In other word, a price hike.

It's never simple, is it?


  1. I'm surprised you got as far as you did. Usually if I were being transferred that many times, someone along the way disconnects the call. When I called the newspaper recently and was randomly sent to a dept, the person asked why I was sent to them. When I told them the operator connected us, he replied that they send calls anywhere just to get rid of them. Hard to believe it's 2009 sometimes.

  2. In reality, the entire experience from the initial phone call to completely the registration took about 3 1/2 hours to complete.

    Like I said, talking to the IRS was actually a very pleasurable encounter.

    With our local version, being that I'm very familiar with the nonsense we state workers inflict on the general public, I had very low expectations to begin with, and by golly, they were met.

  3. Thanks for going through this so now I know better. ;)

  4. Anytime.

    Always glad to share my observations on how backwards my wonderful state can be.

  5. Ha! I have to start beating Charles in leaving comments because that was my thought exactly. But don't you just love bureaucratic phone calls.

  6. Only when I inflict them on other people. :-]

    When they're inflicted on me, no.

    I have an incredibly low tolerance when dealing with other state agencies (Child Support Services is an especially onerous to deal with) and the federal government (Social Security and sad to say the V.A.), mostly because I know what they do and how they do it.

    It's something you never really get used to, so I avoid contact with most agencies at all costs.

    But sometimes, you just have grit you teeth and swallow your annoyance, to "Git-R-Dun".

  7. For some 8 years I was a sole-trader and employer under UK laws working as a medico-legal psychiatrist.

    The most helpful thing I did early on was attend a series of 'how to do it' courses run by the Inland Revenue. They held ones hand through the complications of setting up and running a business, in simple easy to understand lingo. They also gave contact phone numbers for follow-up advice, saved me 200 GBP on allownaces an accountant had failed to spot for me and served choccy biccys with tea.

    Best postgraduate courses I ever did. If yours do, get along, mayb time well spent!


  8. I do know that from time to time, they offer "how-to" seminars for first time home buyers, but I haven't as of yet seen any for running a small business.

    Although in my case, it's simply me selling copies of my book via the internet (I may get out and about this summer and try to peddle them person-to-person).

    It is funny though, that this issue is so pervasive in this state. They got it so that even if you're a vendor at a flea market, you have to have a sales tax permit in order to do business in CT.

  9. Welocme to the world of permits!

    We have no less that 7 for our business.

    Be glad you don't have to have Haz-Mat, waste oil removal, 1099s and W-2s to give out, plus workman's comp, OSHA rqquirements, etc. etc!

  10. Yes, it's just sooooooooo much fun isn't it.

    Unbelievable the amount of permits you need to possible get to do anything nowadays.

    Shoot, I had problems just trying to properly classify my little thingy here for the IRS. Nothing like wading through about 500 or so different codes and sub-codes in order to tell the IRS exactly what it is you do.

  11. I had a similar problem when trying to transfer my broadband from a subsidiary company to the holding company -only it weeks and weeks - I spoke to as many as 30 people for literally entire days going round and round in circles - Nearly all of these people were incompetant and could not understand the process. With a depressed teenage son looking over my shoulder believing his XBOX was not going to be available for weeks I tried every trick I could to think off to sort it out. It was a nightmare and frankly drove me to tears with worry knowing what a state my son might get into. They abdicated responsibility for any decision. Bastards - yes I haven't forgiven them yet.

  12. It can be a bit disconcerting at times.

    Because of the potentional of getting aggravated just like that, even though I had a legitimate business loss for selling my book via the mail, I decided to show a profit instead.

    Just reading 40+ pages of instructions for declaring a loss scared the absolute living daylights out of me.


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