Now we have to collect taxes for mowing?

Discussion in 'Business Operations' started by Smitty58, Mar 22, 2006.

  1. Smitty58

    Smitty58 LawnSite Senior Member
    Posts: 531

    My CPA tells me there is a new law in effect that anyone who makes over $5000 in a year mowing has to pay taxes on the service. So for my area thats 6.5% that I either have to eat or add on to my invoices. So for a $30 cut it will now be $30 +6.5% =$31.95
    Now the question, are you aware of this new law? Do you already collect and pay this? What do you do about current customers, eat it or add it? For new customers it's easy, just add it but for current customers I know they will not be happy to add this 6.5%. So for the legitimate lco's that pay taxes, insurance, workers comp, unemployment etc. it just keeps getting tougher to complete with Johnny down the street mowing grass.
     
  2. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Posts: 4,771

    That's a state law and I know in Kansas you don't have to charge sales tax on mowing services. I would charge the customer the sales tax. I would find search the net and find a printable copy of the new law. I would mail this to all your clients. With your estimates I would write down only what you intend to charge them and make a note "+ tax". I would not include the tax into the estimate. With my invoicing/scheduling software (Lawn Monkey), it will include tax when you go to invoice them, but you have to put the tax rate in there...just a one time entry.

    Are other services being taxed also? Like aeration, dethatching .....?
     
  3. Lux Lawn

    Lux Lawn LawnSite Silver Member
    Posts: 2,267


    Seems to me that it was the stupidest law that the state of Ohio ever came up with...under $5000 you should charge tax.Why should someone who is doing 10 lawns a week get away with not charging tax???They can do the yards cheaper to start with because its not there main source of income,now no tax.All it does this way is drive the prices down,and hurt the full-time guys.
     
  4. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Posts: 4,771

    Personally I would get a second opinion, unless you know for sure the law is in effect. I think there is a law at the federal level that states you don't have to pay income tax if earnings are less than $5,000. Search the net, see what you come up with.
     
  5. mrusk

    mrusk LawnSite Gold Member
    Posts: 3,260

    I have a feeling someone did not read the law right.

    It makes no sense. A customer that has a part timer cut his grass pays no sales tax, but if you have brickman cut your grass you gotta pay sales tax? ehhh
     
  6. Lux Lawn

    Lux Lawn LawnSite Silver Member
    Posts: 2,267


    That is CORRECT.Same thing with snow plowing under $5000 no tax.
     
  7. toac

    toac LawnSite Senior Member
    Posts: 350

    i agree with walker-talker, any earnings under 5000 no income tax
     
  8. daveintoledo

    daveintoledo LawnSite Silver Member
    Posts: 2,587


    if you are full time and make less them 5 grand, you are going to starve....

    the state law is correct, over 5000 must collect sales tax (there is a small deduction on the long form for this that compensated you a bit for your time and trouble.)... dont eat it... add it to the bill.....and dont forget, you have to send the paper work in every month, even if its a month with no income, you still have to send it in......

    here is the link

    http://tax.ohio.gov/divisions/communications/information_releases/st200302.stm
     
  9. BILLY DAWG

    BILLY DAWG LawnSite Member
    Posts: 18

    to lux lawn are you sure you have to charge sale tax on snow plowing in ohio or is it just have to charge for sales tax on ice melt material
     
  10. olderthandirt

    olderthandirt LawnSite Platinum Member
    from here
    Posts: 4,900

    You have to charge for plowing, its a taxable service
     

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