Please bear with me I am new at this, and this is a debate with a friend that I really need someone else's thoughts on before I go to a professional.

Say you started your business last year and bought $1000 worth of merchandise. During the year you sold $750 worth of merchandise (cost) making it $1500 in sales. So $250 worth of merchandise still remains.

For sales tax do you pay on $1500 (sales) or $750 (difference between cost and sales, ie Profit if you have no other expenses), or other?

I am not too worried about federal taxes because I operated at a loss but hoping that will change this year.

edit - I just realized I put this in the wrong forum, sorry