Billing - To break down or not?

Discussion in 'Irrigation' started by zman9119, Jul 9, 2010.

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How do you bill?

  1. Itemized \ Listed out pricing for each item

    22 vote(s)
    66.7%
  2. General description with total price

    8 vote(s)
    24.2%
  3. I work for free

    3 vote(s)
    9.1%
  1. EagleLandscape

    EagleLandscape LawnSite Platinum Member
    Male, from Garland, Texas
    Posts: 4,347

    We itemize everything. Residential we can pay tax at supply house, commercial we have to charge tax on. It's simpler to just do tax exempt at supply house, and charge tax to the end user. Paperwork can be a killer.

    Every single part we have has an item number, it works really good for seeing what our Cost of Goods sold is for the year, and what we still have in inventory that can get carried over for the following year. (plus helps our balance sheet look better than dealing on strictly a cash basis).

    I really want to try and charge a 5% Misc tools and supplies charge. all of our costs are drastically going up, but we havent raised our rates much. We are $99.50 an hour. if we go to $100 an hour, it sounds so much worse, and we will probably lose customers. Squeezing a few penny's out of every invoice by doing a misc tools and supplies is going to help out.

    We typically bill out about $2,500 a day between 3 techs. If we add 5% on top of that, that gives us $75 more a day which is also equal to about $15,000 plus a year. That is a nice chunk of change to offset our costs on shovels, pumps, cutters, glue, tools, kneepads, licensing... all that overhead that typically is overlooked.
     
  2. bcg

    bcg LawnSite Bronze Member
    from Tx
    Posts: 1,835

    I itemize the work but don't seperate parts and labor. So the charge for a rotor is both the material and the labor to install it. I pay tax at the supply house so I don't have to deal with calculating, collecting, reporting and paying it to the state. I can only do that because I lump sum the parts and labor, if I itemized them out, I'd have to collect tax on the parts.
     
  3. Wet_Boots

    Wet_Boots LawnSite Fanatic
    Posts: 47,007

    In states that collect sales tax on services, and that also consider the sprinkler guy to be the final link in the distribution chain, it works out quite simply, since all sales tax for parts is collected at the supply houses, and invoices would separate parts and labor, since only the labor is required to be taxed.
     
  4. I know we discussed this but I still don't see how or why the state allow this. Basically if you charge 95/rotor that means that to not pay tax on that rotor you are selling it to the customer at cost. So if a rotor costs you 6.00 (tax included) then your labor charge is 89.00 which the state doesn't collect tax on. This means the state is allowing you to chose where to put all the profit in such a way as to not collect markup costs on sales. For the life of me I can't see them not eventually figuring this out in a state with no income tax.

    Are you sure you don't have to file a sales tax liability report? I thought all businesses had to even if they had zero sales.
     
  5. bcg

    bcg LawnSite Bronze Member
    from Tx
    Posts: 1,835

    The labor isn't taxable, the parts are. The code is written that if I itemize the parts and labor seperately then I have to collect tax on the parts but if I lump sum it, then I pay tax at the supplier and don't have to collect it.

    If the labor becomes taxable at some point in the future then I'll stop paying tax at the supplier and tax the whole bill (I have to do that for commercial anyway).

    Of course I have to file sales and use tax returns, the lawn maintenance is a taxable service that I have to collect, report and pay on but it's a lot less trouble for me to work out the tax on that than it would be to tax every part we use in irrigation repairs. We have computerized inventory capabilities in the software we use for job tracking but I haven't taken the time to set it up so we don't use it. Keeping track of taxing every fitting would become a pretty big administrative hassle really fast.
     
  6. Wet_Boots

    Wet_Boots LawnSite Fanatic
    Posts: 47,007

    Tax is a state-by-state thing, and no one answer fits all ~ anywhere I work wants tax on labor, so you bill parts and labor separately. Nothing prevents the combining of both on an invoice, since the states are happy to collect more money. The collection of sales taxes on the wholesale level is established by tax codes considering the contractor to be the final retail customer in the sales chain.
     
  7. DanaMac

    DanaMac LawnSite Fanatic
    Posts: 13,156

    I itemize.

    We also have a glue surcharge that we lest as Glue, primer, thread tape. And a gar charge for Propane, flux, solder, and thread tape. Standard is $6 for each, but I go up or down depending on how much we do. My mechanic and also the dealer each have a Shop Materials charge as well. It tends to be a % of total bill.
     
  8. Fireguy97

    Fireguy97 LawnSite Senior Member
    Posts: 394

    Every item is listed. Glue charge, environmental charge for glue, all parts. misc. parts, labor, fuel charge. Everything is there, but no quantities or individual prices. Total job price only. Never had a problem to date.

    As of July first, British Columbia and Ontario have implemented an additional tax. I didn't have a tax number for provincial taxes before. It was easier if I paid it at the supply house and incorporated the cost (7% tax) into my pricing. Now I have to remove the cost of the provincial tax and charge 12% tax on the total job.

    Mick
     
  9. Ric3077

    Ric3077 LawnSite Bronze Member
    Posts: 1,113

    General descriptions are fine...do you know what your head rest or dashboard cost in your truck? Nope but you know what the truck cost....
     
  10. DanaMac

    DanaMac LawnSite Fanatic
    Posts: 13,156

    That analogy does not apply to service and repair. If I go to my mechanic for a "head rest or dashboard" replacement, he lists the prices separately. If I buy a new vehicle, then your analogy makes sense.

    But for service and repair, unless I tell them up front what the total will be, I break it down so they can see what they are paying for. I tell them up front what our rates are, not including parts.
     

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