ok. i bought a business a couple of months ago. It is a service business and i have the same clients as the previous owner. He would charge a person, say $200 for the service and would have the sales tax included in that price. Well I have to pay NJ sales tax by the end of the month and am trying to find the actual base price of the service and the sales tax that would make the figure total out to $200. The previous owner would take the $200 and mulitpy it by $0.07 (nj sales tax) to come up with the sales tax to pay the government. That method is ludacris considering that he is taxing the tax that was already collected. I really suck at math but the only thing I could come up with was taking the $200 and multiplying it by $0.07, and subracting that answer from the $200. This worked out much better but it is still not accurate. Is there an accurate formula to do this? I don't want to have to pay uncle sam more than i have to. thanks.

(tax rate + 1) x (cost of service) = (total cost paid)

 

In your case specifically:

 

(.07 + 1) x (unknown) = 200

 

200/1.07 = $186.91 (rounded down to nearest penny)

 

200-186.91 = $13.09

thanks a whole lot! that formula seems to work out really well. I would have never figured that out. thanks again.