Informing my customers about sales tax

Discussion in 'Lawn Mowing' started by s-lc, Mar 7, 2012.

  1. s-lc

    s-lc LawnSite Member
    Posts: 38

    Hi all,

    I am a rookie who is about to start my 2nd season of lawn care and landscaping. When I gave my customers estimates/prices at the start of last season, I did not factor in New York State sales tax (.08125%) If my labor and costs were $35 for the job, that is what I charged and did not add NY sales tax to that price. My accountant made me realize recently when I filed my taxes that my profits were hit hard after sales tax was figured and collected by the state. As I contact my customers at the start of this season, I was thinking about writing a letter saying the following. Please share your thoughts....

    Dear Mr.XXXXX,

    I hope you had an enjoyable holiday and winter season...While there will be no increase in price for your weekly lawn service, I will now be required to charge the New York State sales tax of .08125% The price of your weekly service will now be $37.85...

    ***the previous price was 35***

    ...

    What do you guys think? Thanks!
     
  2. BigJon

    BigJon LawnSite Member
    Posts: 15

    Sounds fine to me, honest and to the point. No BSing the customer and explains the reason.
     
  3. yardguy28

    yardguy28 LawnSite Platinum Member
    Posts: 4,464

    personally I think it's crap......

    I don't of any that charge sales tax except stores like the grocery and walmart. but I guess if your hell bent on doing it I'd suggest just raising your price and forget telling the client your charging sales tax. kind of like how you don't reveal your hourly rate to clients.
     
  4. Salcido Lawn

    Salcido Lawn LawnSite Member
    Posts: 168

    That sounds good to me. If they have any questions or concerns, direct them to the NY comptroller's website, where it addresses the subject of taxing landscaping. I have had a few people question me about charging taxes, and I have only had to show one client the Texas comptrollers website, because he didn't believe me.
     
  5. Salcido Lawn

    Salcido Lawn LawnSite Member
    Posts: 168

    I charge EVERY client taxes, except those who are tax exempt. I find it much better to be honest any follow the rules (Even if messing with taxes is a PITA!) I have a friend that screwed up on his sales taxe and he got audited by the IRS. The IRS combed through his records for two years!! They went back in his records several years and is cost him hundreds of thousands of $$$!! It bankrupted him! Sales tax will follow you forever, it isn't bankruptable.:wall
     
  6. nickslawnltd

    nickslawnltd LawnSite Member
    Posts: 171

    You may think its crap but most goods and services are taxable. Why would you be scared to to tell your customer your charging them tax? Do they not purchase goods and services from other businesses that charge it? Same with your hourly rate why would you not disclose it?
     
  7. MV Property Care

    MV Property Care LawnSite Member
    Posts: 169

    Perfect, short and honest.
     
  8. s-lc

    s-lc LawnSite Member
    Posts: 38

    this.

    thanks for the support nick.

    i could just increase all of my prices by about 5 dollars and just state in this years contract..."all taxes included" however the estimates i gave for my current yards are accurate. in this economy, i would like to provide my customers with a clear and concise explanation for the slight increase...
     
  9. Salcido Lawn

    Salcido Lawn LawnSite Member
    Posts: 168

    I wouldn't just add a few bucks to "cover the sales tax". I would add the tax as a line item on your invoice. That way, if you do extra work, you can charge the appropriate amount of tax. It will also make it easier for you to track, when you go to pay in the taxes.
     
  10. CircleC

    CircleC LawnSite Senior Member
    from NW
    Posts: 309

    I don't know about your state, but I thought it was federal/state law that "Service" related services were excempt from adding sales tax. If you are selling a physical product like; tree's, widgets, or gadgets than sales tax would be added. To my understanding...."Service" related insiders have pounded the state and federal authorites saying it would destroy our industry. To add 6 to 9 percent to an already depressed industry hammered by rising fuel prices would be a travisty!

    I would check with state tax commision on taxable items. Your tax accountant my be mis-informed. Just because he can do taxes doesn't mean he knows the proper laws. You may be entitled to a larger refund. Tax code changes by the year and sometimes it feels by the day!

    Good luck!
    Posted via Mobile Device
     

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