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Tax Planning/Retailer or Manufacturer



First off, thank you for taking your time to read my question and help me answer it!

I just started a business that manufacturers a few products. I selected manufacturing as my business classification.

I manufacture the products and then sell these for retail. I set up a single member LLC for this business.

After starting my business, I heard that manufacturers get taxed at a greater rate than businesses who only resell/retail. If this is the case, then I do know of a company that could manufacture these same products and I can just resell them.

I would like to remain a manufacturer though since I could make more money, but if I have to pay higher taxes, it won't be worth it.

Question: Do manufacturers pay more taxes than resellers/retailers? If so, what percentage more? The business is in Texas (no state income tax).

Please let me know. Hopefully I explained myself clearly!

Thank you

You are a bit out of my expertise, but here are my thoughts. I believe your business success will probably depend on your overall sales volume, not on the potential of a few percent tax difference. You assume that reselling someone else's product will be just as successful as manufacturing your own (where you control quality and product features). That said, as a reseller you will probably pay state (you may be subject if you ship out of state) and local sales taxes on top of corporate profits. As a manufacturer you usually avoid the store front type sales taxes. Best of luck.

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Richard S


My expertise is in collecting past due taxes and tax returns. While at the IRS I worked on wage and bank levies, liens, Offer in Compromise, late filing and payment agreements every day. I spoke with over 20,000 people concerning their issues while I worked there (just retired).


Ten years working for the the IRS in Collections and tax return review. Worked with over 20,000 people on their IRS issues. Explained their options and usually worked out a solution while they were on the phone.

Masters Degree from Iowa State in Ames.

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