2007-10-27-phoenix-city-sales-taxes-are-a-burden-to-small-business

Phoenix city sales taxes are a burden to small business

Have you ever started a small business that required sales tax collection?  I, myself, did back in the midwest back in the early days of the internet and it was a pain.  The forms, the tracking, the micro payments (this was a micro business my partner and I were in).  All of those memories came rushing back as a friend described her surprise at the cost of getting a sales tax license in the city of Phoenix.

If you've started a business from scratch, retail or otherwise, you are a micro business at the beginning.  You have no customers, no sales and only an inkling that a need or channel for your service or product will produce income.  On top of that, in Phoenix, you must acquire a $50 city sales tax license each year.  If you are a micro business selling a product for $10 and your markup is 20%, it will take 25 sales just to cover licensing annually.  Imagine if, like my friend, you were selling online via Ebay and your chances of selling locally were extremely slim.  It would or could take years to justify the expense of the $50 annual license.  If you do make a sale locally, then all of the tracking and forms I mentioned earlier come into play.  All to record a sales tax collection of around 97 cents based on the $12 sale I mentioned earlier.

Does this seem like a burden?  It does to me.  Perhaps you think the $50 annual is justified and it costs the city this much or more to administrate each city sales tax license.  I might agree with you just because I know they have to validate those same records, forms and payments.  Again, for a collection of just 97 cents.

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