How does it work when I buy items for personal use as a business? -

I just started a business as a sole proprietor and my wife was asking about a few items she would like to buy for personal use (Party favors, toys and other celebration items) and Im not 100% how that works tax wise state (NY) and federal. If I understand it correctly I have to add the profits on my taxes at tax time and pay tax every 3 months for the state, I admit I jumped into this before I fully understood how to pay the taxes....

YOu would need to collect taxes on the items you buy for personal use and pay them like you would for any sale. In CA there is a line on the tax form for this. Call the franchise tax board in your state (NY) ask where the cost of these items goes for tax purposes. In general, you collect sales tax on the ful,l price of an item that you sell it at (if you buy an item for $5 and re-sell it for $10; you pay taxes on the the full $10). For personal items you are not marking up, so you pay taxes on the cost of the item. Try get someone to go over the forms with you so you understand what it is your are doing or you are likely to get audited.