Asking about taxes for new small business?

Question

Hi, everyone. I need your information.

I wanna start a new small business, which is catering business.

I don't make the food, all food i will buy from restaurants.

In this business, look like i have to pay taxes of my sales, then when i buy the food from restaurants i do pay the taxes too.

So, it's double taxes.

What should i do ?

This is the case :

I just a middle man.

I just setup the menus from some restaurants and distribute to my customers.

But customers order many kind of foods from me and pay all together in 1 times to me, then later on i have to divide the payment that i get to some restaurants. Restaurant A how much the total, Restaurant B how much the total, and so on...

Of course double taxes will kill my profit and i could not survive because i just take a little profit.

So, please guide me, what should i do ?

Or this is Impossible ?

Any suggestion will be appreciated.

Thank You

Answer 1

I'm not familiar with the food industry, but speaking generally you're a reseller.  As a rule resellers don't pay sales tax when they buy a product, but do charge sales tax when they sell it.  State laws vary a little bit, too.  In my state (Mass) all you need to do is get a vendor registration and then present a resale certificate whenever you purchase goods.

I'd contact your local Small Business Administration or a local accountant to point you in the right direction.  Those double taxes shouldn't need to be paid, though.

Answer 2

This seems like a flawed business model to me.  Maybe what you need to look at is a restaurant delivery business, where the customers call the restaurant, place their order, then you deliver the order and collect the restaurant's price, including sales tax, plus a delivery charge for each order.  

The problem is that with the economy in the condition it's in now, fewer people are ordering out.  My suggestion is to wait until the economy starts to pick up, then review it again.  In the meantime, Before you go any further, I STRONGLY recommend you contact the Small Business Development Center (at your local community college) and talk to them; the counseling is free.  

Then sign up for the NxLevel Entrepreneurial program...  it's a 12 session course that walks you through the ins and outs of starting or growing your business, and as part of that you will write a business plan.  There is a cost for the NxLevel program but it’s a lot cheaper than losing your investment.

Even if you hire a professional to write your plan, you should still take the NxLevel course.  It saved me from going into a business that would have failed within a year or so, taking my investment with it.  I realized by the third week of the class that I could not afford the business I was looking at and changed directions in the middle of the class.

Business plans may be a pain in the butt to prepare, but without one, your business is doomed to failure.  To start with, you won't know what your startup costs are going to be, what kind of income to expect, what your ongoing expenses are, who your competition is, and even whether or not you can make a profit.  Without a GOOD business plan, you will not be able to get a business loan to get your business off the ground.