In a retail business, do you have to pay tax on your sales or only on profit?

The business has to pay income tax on its profits (only) to the Federal Govt, and also perhaps, to the state, depending on whether the state has income taxes. The business has to collect sales tax from consumers and pass it on the the state along with appropriate reports. So the business doesn't "pay" any sales tax, but it has to collect it and be accurate about it or it could get in trouble.

You'll usually have to pay sales tax to the state you're domiciled in, and sales tax is on the sales. Income tax and self-employment tax (if you're run this business as a self-employed individual) is paid on the profit of the business.

There's sales tax, but that is an expense that you pass on to the purchaser of your goods and/or services (assuming that applies in your state.) As far as income tax is concerned, you pay taxes on profit, technically. However, you'll have to be able to document everything you take off of your total receipts for the year (including purchasing of inventory, business insurance, etc.) in order to calculate profit. The IRS has very specific (and draconian) rules about what can and can't be deducted, so you'll want to be sure you follow those very carefully. This assumes, of course, that you are a sole proprietorship; it gets more complicated if you have a different type of business structure.

Both! You normally buy your inventory tax free because you have a business license. When you sell an item you charge them tax and pay that tax you collected to the state, county, etc. quarterly. Then of course you pay tax on your profits just like getting a paycheck only you pay a larger percent. It also depends on what you are selling - furniture and food have 2 different tax criteria. Hope this helps. Patti

If there is a State sales tax in your state you have to collect sales tax, report it and pay the tax due (which you have collected). Depending on how your business is organized, you pay taxes on net income (income less expenses and costs). Or if the business is incorporated, the corporation pays the taxes and then might pay you a salary (on which you pay tax) That's right.. it gets taxed twice. If you're starting a business, spend a little time with a CPA and get some advice on how to set it up to minimize taxes. If you decide not to bother with paying taxes, then you'll be committing fraud, which is a very risky business and can result in large penalties, including jail time. So see a CPA.

You pay taxes on your profit which is equal to Gross sales-Costs of doing business-Cost of goods. So an example$1.00 in sales minus costs of doing business (salaries, postage, phone, rent, depreciation, dividends, etc) $0.40 less cost of goods sold $0.50 would leave a profit of $0.10 which would be taxable as income. About what the Oil companies are making that Hilary wants to confiscate.