Incorporate sales tax or show it separately

Discussion in 'Business Operations' started by jeffslawnservice, Apr 1, 2011.

  1. jeffslawnservice

    jeffslawnservice LawnSite Senior Member
    Posts: 830

    I had a few customers bring this to my attention, They suggested that I just incorporate sales tax into my final price rather than showing them the subtotal, sales tax and then the total. I figured if I did incorporate it into my final price I would just round up or down to the nearest doolar, but more than likely just round up. What is everyone else doing? I figured they (clients) would like to see exact costs and that if they saw sales tax then they would know that I was legit not someone doing it illegally, but I was told it might deter people away :confused:
     
  2. DA Quality Lawn & YS

    DA Quality Lawn & YS LawnSite Fanatic
    Posts: 8,873

    I would say don't incorporate. Then you have extra work to back out the tax, its your biz, run it the way you want. Customers probably want you to wrap it in as they don't want to pay you with change, to make it easy on them. That don't fly with me...they can just cut a check like everyone else.
     
  3. WheatBookkeeping

    WheatBookkeeping LawnSite Member
    Posts: 108

    Guys, just as a reminder, have your bookkeeper credit the tax that you collect to the Sales Tax Payable account. Then your sales revenue will be correct and the tax you collect will not be considered part of your income base.

    If your customers span across multiple taxing jurisdictions, make sure your bookkeeper knows where the work was accomplished.
     
  4. TJLANDS

    TJLANDS LawnSite Bronze Member
    Posts: 1,669

    Some states such as NJ you would be breaking the law if you didn't list
    the sales tax as a separate line item.
    When you apply for a sales tax license they should tell you your
    states regulations
     
  5. I believe you could really screw yourself if you ever had a sales tax audit.
     
  6. Roger

    Roger LawnSite Fanatic
    Posts: 5,920

    I believe PA requires a separate line item for Sales Tax. I would not consider including it into the price. Yes, all my invoices are odd dollars/cents, but never (in 15 years) has anybody complained. I use QB Pro and it does all the work to make it a separate item, and to roll it up at the end of the month for filing. Why make yourself extra work by always having to break it out after you get the payment?
     

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