Navigating Store Closing Sales: Deciding on Personal Discounts
As I prepare to close my music equipment store, an interesting question arises: Is there a cap on the discount I can grant myself? With a handful of items I’d prefer to keep rather than sell at a steep discount, I’m navigating the fine line between personal preference and business practicality. The idea is to avoid incurring a use tax—often higher than a sales tax—by determining how much of a markdown I’m legally permitted to apply to my own purchases.
Over the years, I’ve witnessed customers using their phones to aggressively price-check my inventory, often pressuring me to lower prices below cost. This constant barrage has prompted a sense of vindictiveness, making me reluctant to offer bargain prices to a public that’s been anticipating my closure since the COVID-19 pandemic began.
Thus, the question remains: To what extent can I reduce the prices for myself while adhering to tax regulations and maintaining a semblance of fairness to all parties involved? This decision requires careful consideration and a dash of strategic thinking.
One Comment
Great insights here! When it comes to setting discounts during a store closing, it’s important to understand both the legal and ethical boundaries. Typically, the key is ensuring that any discount you offer aligns with fair market value, especially if you’re doing “self-dealing” as the owner. Regarding taxes, as long as you’re not pricing items below their fair market value—or attempting to manipulate transaction values to evade taxes—you generally have discretion up to the standard markdown limits, which are often clarified in your local tax regulations.
However, it’s wise to keep thorough records of your sale prices and discounts, particularly if you’re concerned about use tax or other regulatory issues. Finally, balancing the desire to liquidate inventory with the need to treat all customers fairly can be tricky, but transparent communication and consistent pricing policies can help maintain trust—even as you evaluate personal discounts for yourself. Good luck navigating this transition!