View Full Version : To tax or not to tax

01-10-2013, 12:12 PM
Here's is my issue. TAX,
Do you charge sales tax to a lawn cut?
Most people around the burbs of Chicago are flat fees for lawn care. My concern is when to charge tax and when not to charge tax.
I'm entering my 2nd season here and I am going to the tax guy in a few weeks. Last year I was testing the waters to see if I was going to do lawn care full time and a few friends who run companys said don't worry bout tax your first year cause you have write offs and can expect a loss and such. Then others are telling me you can't tax labor in Illinois. I know I need to talk to an accountant. But what's your guys experience or advice. Thanks

01-10-2013, 12:37 PM
If the law says we tax. We tax

01-10-2013, 12:45 PM
I tried at the end of the season to tax a few jobs and the one person "a local accountant " said " are you nuts, you can't tax labor " I felt stupid as hell. Little to say I was not given the job. So that's why I'm posting here just to get other peoples opinion and outlooks. But when I did jobs using materials I did include tax as if they applied . Without question from the customers

01-10-2013, 12:46 PM
Are services taxable in Chicago? Should be easy enough to go on-line and find out.

Darryl G
01-10-2013, 12:50 PM
I don't charge tax, I just collect it for the state...not trying to be a smartie, just the way I look at it and present it to customers. Some may include the tax in their flat-rate price. I don't know what the tax laws are in your state, but there much in my state that isn't taxable, and most professional services are taxable. Avoiding paying sales and use tax in CT will get you in serious trouble. There's a difference between sales and use tax and income tax.

I just did a quick search and it looks like you only need to charge tax on "sales of tangible personal property for use or consumption." http://www.revenue.state.il.us/businesses/taxinformation/sales/rot.htm

01-10-2013, 12:50 PM
I'm sorry I live in the suburbs outside of crook county (cook county) Chicago and they county of cook has a whole different set of rules and rates and taxes that are different from the county I live in. Just to clearify.

01-10-2013, 12:52 PM
Thanks for taking the time out to forward that link. I really appreciate it.

Darryl G
01-10-2013, 12:56 PM
No problem :)

01-11-2013, 05:45 AM
You definitely should know whether landscape/lawn services are taxed in your city, county &, state. That way of someone tries to say "a local accountant" you have the upperhand knowledge, which you should have anyway, as you are the contractor and the expert, correct? I had a client for a fall clean up this year try telling me there isnt sales tax on services. I politely corrected him, all lawn services are subject to sales tax in MN. Before I even advertised when I started in 2011 (was 19, now 21) I knew exactly what sales tax percentage was to be charged.

You need to take an accounting class and/or do some research before you screw yourself with the irs and state revenue dept.

There is a big difference between sales & use tax and "write off" (income) tax. I'm not going to take the time to explain it.

01-11-2013, 11:22 AM
Thanks for the response, but I really don't want you to explain tax write offs and such. It was just a simple post to see what others face in there day to day operations. As you are in Minnesota your taxing is a lot different here then in Illinois. And here in Illinois services aren't taxable. Fyi I follow all the rules for licensing, insurance. I'm not some hack ass you probably think I am cause I asked a simple question about taxes.

01-11-2013, 02:34 PM
Pa doesn't make things easy! Some things are and others not. For example taxable; lawn mowing, fertilization, overseed.....edging, ....Non-taxable; establishing new lawns, prunning or trimming shrubs and trees, pest aps to shrubs- trees- gardens, separately stated charges for raking leaves. Snow plowing or removal is not chargeable, unless removing snow from a roof or gutters. If I'm in doubt of a taxable service, I charge sales tax...............Another crazy tax law in PA. If a taxable item is delivered, the delivery is taxable. If the item is non taxable, the delivery is not taxable! IMO, delivery should stand on its own, either it is taxable or not!

Darryl G
01-11-2013, 02:46 PM
On a related note: I recommend anyone with a start-up business consult with both an attorney and an accountant. You want to make sure that you are indeed operating legally, that the language in any of your contracts/agreements does not violate state or federal law and that you have your accounting set up properly. If you choose to do your own bookkeeping, I recommend you have your accountant do your taxes for at least the first year or two. Any such professional fees are tax deductible.

01-11-2013, 04:13 PM
Thanks for all the responses. I contacted a cpa and Im going to bring him a list of everything we do and he will tell me what's taxable and not, so I will be abiding by all the taxe rules and laws.

01-11-2013, 07:23 PM
Thanks for all the responses. I contacted a cpa and Im going to bring him a list of everything we do and he will tell me what's taxable and not, so I will be abiding by all the taxe rules and laws.

Excellent! I would also recommend doing some sales tax research on your own. Actually, I'd recommend researching as much as you can find on your own about all legal obligations. Never trust just one source of info.

01-11-2013, 07:37 PM
I'm going to take your advice. So for the next two months of down time I'm hitting the books. Lol.

01-11-2013, 09:56 PM
The choice to "charge sales tax," is not yours to make. The state has their rules, and each county may have their own rider on the state sales tax. The collection is done by a state agency. Undoubtedly, you need to apply for a license to do the collections. As stated above, you never "charge" sales tax, you only are collecting it on behalf of the state (uncompensated, I might add). It is your responsibility to make the collection and then remit to the state as required (e.g. monthly, quarterly, or ???). You will get all the information on where to remit, and the procedure to remit, when you get the license. In PA, all this is done electronically -- not even a choice of doing it by paper.

Getting your sales tax collections in order is on the same level as insurance, licenses, and other things you mentioned. It is all part of operating a successful business.