Mercantile Tax ?

[toddot]

Can anyone tell me with certainty if a sign shop manufacturing signs from raw components qualify as being tax exempt from Business privilege and / or mercantile tax ? I see in Pa there is a form to fill out (PA State Manufacturing Exemption Form) But I cannot find it anywhere. Oh yea, I need to know by Thursday. LOL

 

[G-Artist]

I am sure the helpful folks at the tax office can answer that question and probably have many brochures on the topic as well as a few nice Web pages explaining it all....if they are like most states.

 

[toddot]

I am looking specifically at Sign companies. They have general rules but I cannot seem to get a firm response. Of course they would like me to pay it. I was just curious what other shops have done in the past.

 

[Gino]

Mercantile Tax in PA..............................

The mercantile tax is levied on the gross receipts of local businesses. It sometimes is known as the business gross receipts tax, or business privilege tax. The mercantile tax can be levied on wholesale and retail trade, as well as restaurants. The Local Tax Reform Act of 1988 prohibited imposing any new mercantile taxes after November 30, 1988, though jurisdictions which were using the tax at that time are allowed to continue to levy it.

Being in business and not knowing the rules of how to conduct business is no excuse to not file. These are rules that you should have completely answered before going into business. Not a lecture, but a fact.

 

[toddot]

I agree, however, businesses in the practice of manufacturing are exempt from the tax. SO my question is, are sign companies considered to be manufacturers?

 

[Gino]

I agree, however, businesses in the practice of manufacturing are exempt from the tax. SO my question is, are sign companies considered to be manufacturers?

Think about it for a second. Do you really MANUFACTURE anything ??

You make signs. Do you cut the trees, mold the plastics, create ink from scratch or anything else ?? Do you extrude the aluminum ?? Do you fabricate the banner material ?? Do you have vinyl vats out back from which you manufacture your own vinyl sheeting ??

NO. You just make signs by buying already manufactured goods and you put them together to make a pretty sign. That's not considered manufacturing unless you're doing them on an assembly line for hundreds or thousands of customers at a time.

• Is your business located in a manufacturing zone in your town ??
• Is it located in light industry ??
• Is it located in Commercial ??

If not one or both of the first two, again, you're not a manufacturer.

Are you set up for manufacturing license-wise or anything else other than a sign shop. Sure, we can use the term that we fabricate signs or even stretch it and say we manufacture signs, but I highly doubt.... if you have to ask this question you really qualify. Sounds more like tax evasion.

Our shop is in a industry/manufacturing zone, so we might be able to stretch it for what you're asking, but we don't.

 

[paul luszcz]

Sorry Gino, I'm a manufacturer. I registered my business as such when I opened it in 1993 and I've treated it as such ever since. If you're not a manufacturer, what are you? A retailer? Only after you've manufactured the signs. A wholesaler? Again, that's possible only after you manufacture the signs.

Unless you buy finished product and sell it, (like sign frames and holders) or finished custom manufactured signs (which we call outsourcing) exclusively, you are a manufacturer at least part of the time. Most shops are manufacturers most of the time.

You don't need to mine the ore to be considered a manufacturer.

 

[Gino]

I don't know about your state, but here in Pennsylvania you have four [4] choices:

1. Wholesale
2. Retail
3. Service
4. Rental

Our business is set up in an Industry/Manufacturing Zone and titled sign manufacturers also, but we still deal with end users for the most part, which makes us a service and therefore subject to Mercantile and Business Privilege taxes. No way around it. We can use terminology that 'WOWS' people and say we are manufactures and sound all big and mighty, but the bottom line is.... with everything being basically custom.... we are still sign makers.

From Wikipedia..... : Manufacturing is the use of machines, tools and labor to make things for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale. Such finished goods may be used for manufacturing other, more complex products, such as household appliances or automobiles, or sold to wholesalers, who in turn sell them to retailers, who then sell them to end users - the "consumers".​

 

[gnemmas]

Is General Motor or Ford manufacturer?

 

[StopSignGraphics]

I agree with Gino... I just about lost a new customer over a gross receipt tax issue. Their former printer wasn't charging it and I was. Both my customer and myself had some conversations with the revenue department. In the end the customer agreed that I was following the tax laws and the other printer wasn't.

It really boils down to someone has to pay the tax. I have a few customers that I do wholesale work for and they have a tax exemption number that I keep on file. I do not charge them any tax but they should be collecting tax from the people that they are selling the product too.

 

[Gino]

Stop.....

I think you're talking about state sales tax which is different. We have the ability to collect sales tax from customers and allow others not to pay it if they are re-selling it or have a verified yearly tax exemption certificate filed with you.

Here's one... did you know that each and every customer that is on file with you having a tax exemption status must fill that certificate out each and every year..... and it must be in your files signed in ink and no electronic copies are permissible ??

At least here in PA it's that way. reason being is..... a company can easily not renew their status with the state and therefore is not eligible for non-taxable items any longer, so you must check in with them every year.... or at least update your files when they come in for their next order every new year.

 

[toddot]

I'm not sure if I spend more time running the business or making signs anymore. Every time you turn around there's more rules and regulations to adhere to. 80% paper work 20% sign making. LOL

 

[jiarby]

well...

Even if you pay sales tax to a vendor when you are exempt you can deduct that incorrectly paid tax from your monthly returns.

Like when a school or a church shows up to buy without bringing their certificate... they pay the tax and then when they file their returns they get ot back.... If they are paying attention, have good record keeping, and a good accountant doing the returns.

 

[Dice]

one word. CPA.

 

[toddot]

Technically Dice that is not a word its just 3 simple letters.LOL And I feel the same way about accountants as I do about Mechanics and Lawyers. But that's a story for another time. Last year my accountant almost made a $10,000.00 mistake Not in my favor either, but a lowly ole signmaker with some common sense happened to be perusing his return on his way to the post office on Aoril 15th, 2009 and caught it. Had to file an extension and have her straighten it out. So now I dont trust any of them.

 

[kstompaint]

Last year my accountant almost made a $10,000.00 mistake Not in my favor either, but a lowly ole signmaker with some common sense happened to be perusing his return on his way to the post office on Aoril 15th, 2009 and caught it. Had to file an extension and have her straighten it out. So now I dont trust any of them.

We're all human. If there's a sign maker among us who denies ever having sent out a misspelled word or name, he's a liar.