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BP348
02-14-2009, 09:58 AM
Let's say you charge someone $40 to cut their lawn. When you send them the bill do you charge a tax on top of the $40 or do you include the tax as part of the $40 you quoted for the job?

yardatwork
02-14-2009, 10:40 AM
In Pennsylvania we have to charge a 'sales and use tax' on all maintenance work. This includes things like mowing, watering, edging, over seeding, shrub trimming, mulching, weeding, etc. This is at a rate of 6%. But, we do not have to charge on things like trimming limbs on trees, cutting the whole tree, doing a new lawn, landscape design, planting new shrubs, etc...basically one time jobs. So, many people who do a mulch job will write it up as "landscaping" or "hardscaping" to avoid the tax. There are so many gray areas in the tax documentation that the Department of Revenue sends out when you register your business. It's always better to pay it if you're in question of the service. Just remember, if you get audited, you'll be paying huge fines and accrued interest.

I personally just charge a flat rate with keeping in mind the 6%...I include the tax expense in the overall cost. Many clients will be really confused when you send them a bill with sales tax for a service provided.

LB1234
02-14-2009, 12:36 PM
We charge sales tax on after what the total cost is. We do NOT include it in our pricing. Although you could.

For us sales tax is freakin confusing....

In jersey its currently 7% but there are some weird laws/regs. You really need to check with your state and/or your accountant. There are grey areas in our 'landscaping' industry as well. IF someone fills out an ST-8 then they are EXEMPT from being charged sales tax...this is mostly for capital home improvements. BUT...as of Nov of '06 NJ changed the laws stating a landscape install is no longer a capital home improvement. HOWEVER, hardsacpe installs ARE capital home improvements...so no tax is charged. AND...if we pay sales tax on materials we are NOT allowed to charge sales tax on either the sales tax we paid OR the amount we already paid sales tax on...in other words we can only charge sales tax on the materials markup. HOWEVER, if we roll materials into the labor then we can than just charge the sales tax on the whole amount...

Ya, I'm confused too....

DLAWNS
02-14-2009, 08:28 PM
I always charge sales tax on top of what the cost of the work is.

Tommy Boy
02-14-2009, 08:34 PM
In Georgia, service is tax exempt so a $40.00 service visit is just that. I have to charge if it's product related. then it's sales tax on top of.

bohiaa
02-14-2009, 08:41 PM
I always kind of Cringe when I read or hear someone saying they Charge tax.......

you dont Charge tax. you collect it. you wil have to check your state laws.

if so, then you will need a TAX number. diffrent than a EIN. then you will find that you have to pay for the honor of collecting tax for your state.

daveyo
02-14-2009, 08:57 PM
Let's say you charge someone $40 to cut their lawn. When you send them the bill do you charge a tax on top of the $40 or do you include the tax as part of the $40 you quoted for the job?

In NJ if your just cutting a lawn you charge $40.00 and then 7% sales tax. And yes you work for the state for free. You then report your tax monthly if you exceed a certain dollar amount, if not quarterly is good. As for landscaping there are different ways you can do it, but you still have to collect the tax and pay the taxman payuppayuppayuppayuppayuppayup

Tommy Boy
02-14-2009, 09:00 PM
I always kind of Cringe when I read or hear someone saying they Charge tax.......

you dont Charge tax. you collect it. you wil have to check your state laws.

if so, then you will need a TAX number. diffrent than a EIN. then you will find that you have to pay for the honor of collecting tax for your state.

Excellent Post We Collect Tax, you are 100% right my friend!

bohiaa
02-14-2009, 09:13 PM
Also: what's werid. "here in Texas anyway" If I go cut grass, I can NOT collect tax for the service. But If I purchase a tree, at holesale price, then I pay that tax, I then sell the tree for retail. I have to collect tax for the diffrentace......

Dang it gets hard to keep up with

Hoots
02-14-2009, 11:26 PM
Bohiaa, you are supposed to collect sales tax for all services. I think the rules changed not too long ago. I was given a page by my CPA that showed taxes for the mowing labor. (I mow for another CPA and he has not questioned the tax on his service)

When you purchase your trees, mulch etc. you should provide your sales and use tax ID to the wholesaler and not pay tax when you purchase it. When you sell it, you charge the customer retail price plus tax. When you go to Home Depot or Lowes (I need to in a pinch) you can set up a sales tax exempt account with them to purchase goods like mulch at the sales price with no tax. HOWEVER if you are purchasing a hammer or something for business use you must pay sales tax at the store.

EX: Tree wholesale $100 Write the check for $100
Sell the tree to the customer (including labor) for $200 plus tax.

Our tax rate is 8.25% SO The customer receives a bill for $216.50

$200 stays with me for all expenses and $16.50 goes to the state comptroller once every quarter.


For the new guys who may not know, when you need to tell a customer what their mowing rate will be with sales tax, use this multiplier:

1.0XXX x $XX Move the decimal to places to the left.

Tax rate of 8.25% 1.0825 x $20 = 21.65

Congratulations, you just earned Uncle Sam $1.65 sales tax.

LB1234
02-15-2009, 12:23 AM
Thanks for correcting me BOHIAA...I don't CHARGE sales tax, I collect it. We all basically hold on to it for the goverment until its time to turn it in.

I thought about the whole tax exempt thing and not paying for it when I purchase my materials...but I just play it safe and pay the sales tax then. that way when the tax auditor decides to do the landscape industry one year I can show ALL my receipts have sales tax for materials. I can then show my tax-exempt forms for certain businesses that we do as well as for the capital home improvements.

I just love sales and use taxes!!!:cry:

newtostone
02-15-2009, 02:56 AM
I am glad to see this on here, its a good conversation and good topic for many guys out there that don't charge....wait, "collect" :cool2: silly me. But there should be a website for your state which will help you know which permits and rules apply to you when starting a business. NY has one and thats how I became aware of collecting sales tax.

General Rule..
If its "New" no tax
If its "anything else" get that money

Side note on this, when doing a new install the home owner must sign off a form saying that its new, you will need that if you get audited.

BP348
02-15-2009, 04:43 AM
For the new guys who may not know, when you need to tell a customer what their mowing rate will be with sales tax, use this multiplier:

1.0XXX x $XX Move the decimal to places to the left.

Tax rate of 8.25% 1.0825 x $20 = 21.65

Congratulations, you just earned Uncle Sam $1.65 sales tax.

Let me see if I have this correct.
Cut yard = $40
Tax = 8.25%

40 x 1.0825 = 43.30

So each yard I cut for $40 I need to pay the state comptroller $3.30. :confused:

So the guys who don't collect :laugh: the tax on their bill do you just take the $3.30 out of the money received? That would mean that you quote a job @ $40 but your really only charging $36.70 + $3.30
in Tax.

I'm thinking that on my bill's I'll show the $40 plus the $3.30 tax. That way I'll be able to keep everything straight. I don't need any IRS problems

Hoots
02-15-2009, 10:09 AM
Let me see if I have this correct.
Cut yard = $40
Tax = 8.25%

40 x 1.0825 = 43.30

So each yard I cut for $40 I need to pay the state comptroller $3.30. :confused:

So the guys who don't collect :laugh: the tax on their bill do you just take the $3.30 out of the money received? That would mean that you quote a job @ $40 but your really only charging $36.70 + $3.30
in Tax.

I'm thinking that on my bill's I'll show the $40 plus the $3.30 tax. That way I'll be able to keep everything straight. I don't need any IRS problems

Almost. You cannot just subtract the numbers. You always have to multiply or divide. You have a shortage of $.25 per trip that you have to cover. That could be the cost of your fuel for the day in your handheld equipment. Trust me it adds up.

Ex: You say $40 mow x 1.0825 = $43.30 is correct.
But if you want to include the Sales tax in the $40 bid you must divide by 1.0825
$40 / 1.0825 = $36.95

and to check
36.95 x 1.0825 = $39.9983 just round up.

Now to make it even more confusing, you need to check with the city where your business is located and use that tax rate. It varies from city to city.

I once had a customer that tried to tell me that his house was in an area that was at 8% (which was true) and he stiffed me for the $.25 on his $100 bill, among other issues. Needless to say he is currently looking for someone elso to mow his lawn.

LB1234,
How much material do you buy to resell to your customers? When you pay tax on your purchase, and your customer pays tax on your resell price, you are paying Uncle Sam 2 times for that material. You are taking a 8% pay cut on all of your sales of goods!!!

DLAWNS
02-15-2009, 12:00 PM
Bohiaa--you love to keep everyone on their toes, huh? I do collect the tax not charge it. I think everyone knew what we meant though.:clapping:

Kennedy Landscaping
02-16-2009, 12:16 PM
I don't do any sales tax. I give them a flat price, normally in increments of five and what I tell them is normally what they will get billed for, unless otherwise approved by the customer, but no I DO NOT charge any tax.

Uranus
02-16-2009, 12:23 PM
No tax on labor up here, only on good sold. All estimates give a price and then say "plus 5% mass. sales tax".

newtostone
02-16-2009, 12:37 PM
I don't do any sales tax. I give them a flat price, normally in increments of five and what I tell them is normally what they will get billed for, unless otherwise approved by the customer, but no I DO NOT charge any tax.


http://www.ksrevenue.org/pdf/forms/pub1525.pdf#xml=http://search.ksrevenue.org/texis/search/pdfhi.txt?query=sales+tax+lawn+care&pr=KSRevenue&prox=page&rorder=500&rprox=500&rdfreq=500&rwfreq=500&rlead=500&sufs=0&order=r&cq=&id=4998ae8012

Kennedy Landscaping
02-16-2009, 12:55 PM
http://www.ksrevenue.org/pdf/forms/pub1525.pdf#xml=http://search.ksrevenue.org/texis/search/pdfhi.txt?query=sales+tax+lawn+care&pr=KSRevenue&prox=page&rorder=500&rprox=500&rdfreq=500&rwfreq=500&rlead=500&sufs=0&order=r&cq=&id=4998ae8012

What is it I am supposed to look at? I am too lazy to read the whole 52 pages lol

CLARK LAWN
02-16-2009, 01:30 PM
Kennedy you are supossed to look through it you are required to collect sales tax. it took me about 2 minutes to skim it and find out that it is required. Now since you posted on a public forum that you dont anyone from the state can see that and audit you and you will be on the hook for lats of past taxes and late fees.

bohiaa
02-16-2009, 07:58 PM
Let me see if I have this correct.
Cut yard = $40
Tax = 8.25%

40 x 1.0825 = 43.30

So each yard I cut for $40 I need to pay the state comptroller $3.30. :confused:

So the guys who don't collect :laugh: the tax on their bill do you just take the $3.30 out of the money received? That would mean that you quote a job @ $40 but your really only charging $36.70 + $3.30
in Tax.

I'm thinking that on my bill's I'll show the $40 plus the $3.30 tax. That way I'll be able to keep everything straight. I don't need any IRS problems


GENTLEMEN:

dont go by this exzample........... PLEASE DONT...

find out what it is in YOUR AREA... where I'm at our sales tax is 6.25 we are in "rather the shop" a County. NOT A CITY. your area may differ.

as far as a web site...there is one....
go to your states web site....
DONT SCREW THIS ONE UP, you can find your self in REAL trouble.

THIS EXZAMPLE is VERY WRONG,,,, as you know or should LAndscaping business NOT unlike others is all about tax exzemptions....that's it....
if you dont show a profett, which you shouldn't you dont have to worrie about 3.30 besides, you will recive 50.? per mile on your truck, UNLESS your using AG fuel, 100% for Equiptment.
Get with a Tax person. they can show you ways to do everything...

Best of luck

Hoots
02-16-2009, 08:17 PM
GENTLEMEN:

dont go by this exzample........... PLEASE DONT...

find out what it is in YOUR AREA... where I'm at our sales tax is 6.25 we are in "rather the shop" a County. NOT A CITY. your area may differ.

as far as a web site...there is one....
go to your states web site....
DONT SCREW THIS ONE UP, you can find your self in REAL trouble.

THIS EXZAMPLE is VERY WRONG,,,, as you know or should LAndscaping business NOT unlike others is all about tax exzemptions....that's it....
if you dont show a profett, which you shouldn't you dont have to worrie about 3.30 besides, you will recive 50.? per mile on your truck, UNLESS your using AG fuel, 100% for Equiptment.
Get with a Tax person. they can show you ways to do everything...

Best of luck

What are you talking about at the bottom of your quote "This example...."

I did not see anything about profit and ag fuel.

The biggest point to this is check with your local CPA and the city or county (where your physical business is located) and use their tax rate

dvog
02-17-2009, 10:40 AM
$40 plus tax. You dont pay sales tax. You collect it from the customer for the state.

Jason Rose
02-17-2009, 11:09 AM
Kennedy you are supossed to look through it you are required to collect sales tax. it took me about 2 minutes to skim it and find out that it is required. Now since you posted on a public forum that you dont anyone from the state can see that and audit you and you will be on the hook for lats of past taxes and late fees.

I'm in Kansas, I spent about 10 minutes with that 52 page form posted above and found that MAINTENANCE, such as mowing, is NOT taxable, residential or commercial. The only services that are taxable is if you are physically adding to the property (commercial) like planting trees, shrubs, etc. For residential it's basically the same rule, you must be adding something to the property, not just maintaining it.

Lawn and Landscaping Services
Services provided by the lawn care profession may be either taxable or not taxable. If the service involves the installation or application of tangible personal property, the service is generally TAXABLE. However, the installation or application of tangible personal property at a residence or in connection with the original construction of a building or facility is exempt. (See Residential Labor Services and Original Construction beginning on page 6.)
The following list contains some common lawn care services that are not taxable under any circumstance. For more information on this subject, consult EDU-30, Sales Tax Guidelines for Lawn & Garden Care, Pest Control, Fertilizer Application, Landscaping and Retail Sales.

Aerating, Lawn cleanup, Rototilling, Dethatching, Mowing, Trimming/Edging, Soil Testing, Tilling/Plowing, Tree/Stump Removal, Backflow Testing, Raking, Snow Removal

IMPORTANT: The application of pesticides, herbicides and fertilizers to residential lawns is taxable. Applicators should purchase the pesticides, herbicides and fertilizers exempt from sales tax and charge their customers (residential and commercial) sales tax on the total charge (materials and labor), even when these services are performed in conjunction with the first or original construction of a building or facility, or at a residence.

Hoots
02-17-2009, 05:35 PM
Pay attention and your taxes!

From the website of the Texas Comptroller:

Taxable Services
Planting, transplanting, relocating and removing indoor or outdoor plants
Identifying, preventing or curing plant diseases
Pruning, bracing, spraying, fertilizing and watering plants

AND MY FAVORITE PART
Planting, mowing, trimming and edging grass or other ground cover
Planting and maintaining flower gardens
Trimming, spraying, and maintaining trees

http://www.window.state.tx.us/taxinfo/taxpubs/tx94_112.html

This lesson is free. Not listening will cost you...in penalties.

Look to your local area government for correct sales tax.

Good day.

Hoots
02-17-2009, 05:38 PM
BTW It appears that in the second section under Mowing by the Self-Employed:

In a sense it appears to encourage part-time mowing....as long as you don't make more(Rather REPORT more than $5,000)

Lawn Care and Landscaping by the Self-Employed
Lawn care and landscaping (other than pest control services requiring a license) are nontaxable when done by a self-employed individual who:

does the actual lawn care or landscaping services;
has no employees, partners or other persons providing the services;
has gross receipts from the services of less than $5,000 during the most recent four calendar quarters.
If your income from landscaping and lawn care exceeds $5,000 during the most recent four calendar quarters, you must begin collecting tax on these services on the first day of the quarter after the threshold is exceeded. When your gross income from these services falls below $5,000 for the most recent four calendar quarters, the exemption resumes on the first day of the next quarter.