Selling PCs

[Ferrit]

Although i would agree with KINGofBLEH mostly, this has gotten a little off topic. The concept was do I have to pay taxes on resold merchandise he bought from a computer store and I think the other issue of can he sell a computer buying retail and selling retail and make money is an issue as well.
My personal opinion is no on making money on computers bought and resold retail.For a number of reasons
1: Computers stores are not going to sell you hardware at cost there isnt any money in it.
2: Imagining you can compete with big box stores is really not practical.
thats just a couple but others would be rma issues warranty issues service etc etc.

[SB]

Agreed Ferrit - that's the #1 thing ppl seem to overlook when thinking about selling machines. They see profit - then HELLO - I gotta SUPPORT this machine? Well maybe the machines I sell wont tear up much. HAHAHAHAHAHAHA....

[KINGofBLEH]

</font><blockquote><font size="1" face="Trebuchet MS, Verdana, Arial, Helvetica, sans-serif">quote:</font><hr /><font size="2" face="Trebuchet MS, Verdana, Arial, Helvetica, sans-serif">Originally posted by SB:
<strong>Agreed Ferrit - that's the #1 thing ppl seem to overlook when thinking about selling machines. They see profit - then HELLO - I gotta SUPPORT this machine? Well maybe the machines I sell wont tear up much. HAHAHAHAHAHAHA....</strong></font><hr /></blockquote><font size="2" face="Trebuchet MS, Verdana, Arial, Helvetica, sans-serif">Ferrit & SB both have a good point. On average it will take anywhere from 4-6 hours to completely build a system from parts to finished product (including OS and software). This does not include burn-in time.

When you factor in time spent on diagnostics, phone calls and warranty repairs, you would only be clearing about $15 an hour (US) based on your profit estimates above.

Personally, I only build high-end custom designed systems for small biz owners, affluent clients, gamers and friends. The profit margins are better and worthwhile.

[geoscomp]

Back to the original question, or at least part of it, in this country..(usa)...in order to charge sales tax you have to have a resellers permit. This allows you to purchase your parts without paying a sales tax at the time you purchase them, and then charge the whole tax at the time of sale. However, saying the cost is one thing plus tax in order to make the price seem lower, and then not paying the tax to the government is called tax fraud, and they get verry nasty about that sort of thing.

[zerotact]

HI,
I live in the midwest I have a small business I run, but have encountered this when I went to sell computers. From the best I can gather on my own without paying for a lawyer, and how I do things right now. So long as you do not use a tax ID# to buy parts wholesale and you observe all applicable taxes when purchasing the supplies for the machine. I put in the books that I was re-embursed for the cost of my parts, then paid a fee to assemble and load the machine ( labor fee). In missouri there is no sales tax on labor. Now I have to provide my customers with the actual reciepts that I got from the parts, because they were bought on thier behalf. Then I move all of my profit over to the labor charge. I.E. I sell a computer for $1000, It took $560 in parts. I provide them with the reciepts for the machine, for with they re-emburse me. Then they get a reciept for $440. All totaled, they pay the same but you only charged them $440 and the rest was re-embursement for materials bought on thier behalf. This does not totally get you out of having to pay tax, just having to keep track of sales tax. So long as you, 1. Do not keep any inventory, and 2. Make sure it is stated that you are buying the parts for them, and your only professional service is the labor to, plan out the machine, assemble, load, and test the machine.
Also make Durn shure you pay income on this income either by creating a business, and adding it in with your own taxes. I asked my accountant, and she said it was definately a grey area, but adheres to law, and that i would most likely not have problems so long as this was a Small business. If I started making enough to be able to afford a lawyer.. and an accountant full time... then would not be a time to cut corners.
Has anyone else done this?

[geoscomp]

zerotact..yes I used to do the same here in Minnesota when I built machines on my own, but the state that elected a professional wrestler for a governor has decided that you can only not charge sales tax on items that you "restore to original condition"..in other words, if the parts are installed in a machine, then we have to collect tax and pay tax on the installation fee. Labor charges are only applicable if nothing new is added..in the case of a new computer, that would mean you have to give the customers all the parts in their original packing. Strange, but thats the way the attorney general reads it.

[Orangemon1]

I think the tax kicks in at gross sales amount of $30000. If your less than that you don't ahve to bother with charging tax. But that amount is nothign with pc sales.