@mikpenie part of the answer depends on the State the business is in. Assuming that this is a retail business :
(a) For federal purposes on Schedule-C, your gross income is ONLY the proceeds of the sales --- not including the state sales taxes you collected on behalf of the state.
(b) on the row where you report the taxes and fees you report ONLY taxes for operating the business . Most states ( I am familiar with MI ) has a mechanism for the retailer not having to pay sales taxes on inventory -- thus your "Cost Of Goods Sold" -- COGS-- does not include any sales taxes.
(c) For State taxes there is usually an area wherein you reconcile the sales taxes collected on behalf of the state and the Sales Proceeds.
Does this help ?
Is there more I can do for you ?
