Hiring Accountant or Number crunch yourself

nakamuru · #1 10-19-2017

So i have been doing Turbo tax over the years and thinking of getting a accountant this time. My type of business is dropshipping as well as manufacturing.

I know dropshipping, nexus is involved and can get quite complicated but got question regarding itemized goods purchased with a gift card then reselling it on my own domain.

So the gift card will be the expense or the actual items being purchased (like item 1, 2, 3 etc..)

I'm guessing it might be both as IRS might check the source of funds I purchased it as well as the items. Gift cards don't show itemized list and only charges so I'm guessing I need to print out every single item (price and description) and keep those records.

So you guys who are doing dropship, do you print out each item list for records ? That means thousands of transactions I have done I will have to go back and print each page?

Sorry i think this tax question so might have to contact turbo tax experts or accountants but maybe your in same situation as I am.

vettefever17 · #2 12-26-2017

Quote:

Originally Posted by nakamuru

So i have been doing Turbo tax over the years and thinking of getting a accountant this time. My type of business is dropshipping as well as manufacturing.

I know dropshipping, nexus is involved and can get quite complicated but got question regarding itemized goods purchased with a gift card then reselling it on my own domain.

So the gift card will be the expense or the actual items being purchased (like item 1, 2, 3 etc..)

I'm guessing it might be both as IRS might check the source of funds I purchased it as well as the items. Gift cards don't show itemized list and only charges so I'm guessing I need to print out every single item (price and description) and keep those records.

So you guys who are doing dropship, do you print out each item list for records ? That means thousands of transactions I have done I will have to go back and print each page?

Sorry i think this tax question so might have to contact turbo tax experts or accountants but maybe your in same situation as I am.

Get an accountant to itemize it. It wont be cheap. It will be based on hourly rate. But, if you want to save the cash, then you can do it yourself with a little practice. The IRS will only see one side of the transaction or what you report. You need to document both sides. You can easily compile your sale and profit number through paypal or whatever you use to keep your accounting. But to document the original incurred cost of the item, you will need to have transaction numbers for that sale. I tend to take screen shots on cost items, or make sure to have them saved in my accounts. If you do in fact get audited, the accountant will ask for transaction numbers and pictured proof of the item and sale date. He/she will reconcile each itemized cost to make sure your number total matches.

As for your nexus question, general nexus rules are only to pay local taxes in your state. (you may need to look up your state's laws.) Anything that is sold out of state is free of local state taxes and only federal. The in state taxes change by county and city. You can find this information through your state tax website or through google a lot times. Hope this all helps.

phaz0rz · #3 12-27-2017

Jeeze that's complicated. Total everything up and take your paperwork to an accountant.

nakamuru · #4 01-04-2018

Quote:

Originally Posted by vettefever17

Get an accountant to itemize it. It wont be cheap. It will be based on hourly rate. But, if you want to save the cash, then you can do it yourself with a little practice. The IRS will only see one side of the transaction or what you report. You need to document both sides. You can easily compile your sale and profit number through paypal or whatever you use to keep your accounting. But to document the original incurred cost of the item, you will need to have transaction numbers for that sale. I tend to take screen shots on cost items, or make sure to have them saved in my accounts. If you do in fact get audited, the accountant will ask for transaction numbers and pictured proof of the item and sale date. He/she will reconcile each itemized cost to make sure your number total matches.

As for your nexus question, general nexus rules are only to pay local taxes in your state. (you may need to look up your state's laws.) Anything that is sold out of state is free of local state taxes and only federal. The in state taxes change by county and city. You can find this information through your state tax website or through google a lot times. Hope this all helps.

Yes i know nexus is whatever item you is stored in your state will be taxed etc.. But some items I carry i will post it items on my shop that is from ebay or amazon for example and buyer will purchase the item and then i make the purchase on ebay or buyer. And since I dont know where the item is coming from in this case ,is this something I should be very concerned about? I know that i can backtrack and see the tracking and see which city/state it leaves from which will indicate if it is from the state I'm in . Will take some time but seems like this will solve the nexus issue .. what do you think?

vettefever17 · #5 01-07-2018

Quote:

Originally Posted by nakamuru

Yes i know nexus is whatever item you is stored in your state will be taxed etc.. But some items I carry i will post it items on my shop that is from ebay or amazon for example and buyer will purchase the item and then i make the purchase on ebay or buyer. And since I dont know where the item is coming from in this case ,is this something I should be very concerned about? I know that i can backtrack and see the tracking and see which city/state it leaves from which will indicate if it is from the state I'm in . Will take some time but seems like this will solve the nexus issue .. what do you think?

So, I think I understand what you are trying to say. Basically you are using arbitrage and dropshipping. But there is an exception---certain states declare nexus differently and who is responsible. Sometimes the wholesaler (aka the third party you bought it from pays in their state) or sometimes you have to pay it. When looking this stuff up the "third party" term will play heavily in this. Most states have no problem with this and only require in-state. But there are a few states that can be difficult. At this point of your worry, I would consolidate my drop shipping only orders. After that, figure out which states make the wholesale pay or you pay. I would only advise this if you have the time and patience. Otherwise, seek a professional to do this for you. This is not a time to save or be cheap. A highly qualified tax specialist or CPA can not only perfect your return, but get you more in a legal manner. Hope this helps...