How does Closet Storage Concepts treat sales taxes assessed to its customers?

According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the company's policy is to exclude sales taxes assessed to its customers from its sales figures. The document states that Closet Storage Concepts currently does not provide goods or services subject to sales tax in its operational jurisdictions. However, Closet Storage Concepts does pay sales and use taxes on material purchases, which are presented net of these taxes. These use taxes are recorded as accrued liabilities on the balance sheet until they are remitted to the state agencies.

For a prospective Closet Storage Concepts franchisee, this means that the prices quoted to customers do not include sales tax, as the company aims to exclude these taxes from its reported sales. Franchisees should be aware that while they may not be collecting sales tax from customers, Closet Storage Concepts does pay sales and use taxes on the materials they purchase for installations. These taxes are accounted for as accrued liabilities until paid to the relevant state agencies.

This policy ensures that Closet Storage Concepts' sales figures accurately reflect the revenue generated from its services, without the inclusion of pass-through sales tax amounts. Franchisees should maintain accurate records of their material purchases and the associated sales and use taxes to ensure compliance with state tax regulations. Understanding this policy is crucial for managing the financial aspects of a Closet Storage Concepts franchise and ensuring accurate financial reporting.