Reply #1: It's not a stupid question

[F.Gordon]

Sales tax is included in your Gross receipts...your Gross Income. It's included in your gross profits but deducted as a tax expense. It's a wash.

One thing. Be very careful with your 1099er (if this isn't a hypothetical question). They are not an employee. You should have a sub-contractor agreement with him/her. Intuit has some legal templates that you can use that won't cost you much and you don't have to hire an attorney.

You could be opening up a huge can of bad ass worms if you don't shield your S-Corp from the 1099er. My suggestion? Hire a CPA. Even if it's just to do your quarterly reports.