I purchase products and resell them, adding services that relate to computers and technology. For example, I might purchase a laptop, install custom software and settings according to my customer's industry.
In the course of such a transaction, I incur expenses for the product, its shipping, and sometimes tax (I am not set up as a non-taxable reseller in this example).
When I bill my customer, I've been struggling with the "correct" way to handle the shipping charges. I charge tax on the product, which is not marked up. I charge tax on my time as a service. Finally, I add the shipping costs as a non-taxable item to the invoice.
Is this the accepted way to handle shipping charges?
Background: I am more of a programmer than a businessperson. I use Quickbooks online and have a very small customer base.
Is this the accepted way to handle shipping charges?It depends on which shipping charges you are referring to. This is how I would do it:
Note, that you can charge the customer whatever you want for the laptop. You can charge them what it cost you, more, or less. I would at a minimum include your shipping costs and taxes in the price of the laptop.
To summarize: Include the shipping costs associated with the initial purchase of the laptop in the price to the customer. This means you will tax that shipping charge. If you have to ship the laptop to your customer, add that shipping charge as a separate line item in the bill, and do not tax it.
I hope that makes sense.