sales and use tax

Discussion in 'Starting a Lawn Care Business' started by tlipari, Apr 29, 2007.

  1. tlipari

    tlipari LawnSite Member
    Posts: 13

    I'm starting on my third season this summer and I've come across a few questions that I can't seem to find answers to, which is why I'm reaching out to you folks. Do lawn service companies qualify for sales and use tax exemption? I mean, I pay the sales tax when I buy the product (flowers, mulch, etc) And of course when I bill the customer I make a profit.....but are we supposed to charge sales tax? I was filling out a credit app with a local nursery and the sales and use tax exemption form was attached, I feel stupid for not knowing if I qualify or not? I didn't turn in the form because I didn't know. I was just looking for a way to have the credit to get the product, do the job, charge the customer, pay the nursery off and make a profit. Isn't this the way it works?
  2. TLS

    TLS LawnSite Fanatic
    Posts: 7,937

    Without getting into too much detail.

    You must register for a Sales Tax License in your state.

    Most all of our services are Taxable...check with your state.

    Only the END user (customer) pays sales tax.

    You cant tax on tax.

    Therefore, you must make sure YOU are not taxed for the materials, or your cost of goods sold that you will eventually tax.
  3. tlipari

    tlipari LawnSite Member
    Posts: 13

    Thanks for the reply TLS, I'm on the state website now signing up. Still some confusing subjects but I'm learning.
  4. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    But you can pay tax when purchased.... this way you have already paid tax on it .... you jsut have to keep your recipts...

    However... when I purchase something big... Like a mower I dont pay tax.
    I keep that money in my account "gaining interest" then when I have to.
    I pay tax on it... My money in my account gains ME interest, My money in someone elses account gains them interest.

    ya need an accountant
  5. TLS

    TLS LawnSite Fanatic
    Posts: 7,937

    To clarify...

    If your registered to collect sales tax and you buy mulch or fertilizer to put down on a customers property, you do NOT pay tax at the mulch or fertilizer store. This purchase is exempt from tax because you will be charging your customer tax for the service.
  6. motoguy

    motoguy LawnSite Member
    Posts: 78

    I've recently contacted the state (Missouri) about this very issue. The informed me that my business is a service business (duh), and as such, I do -not- collect sales tax. I was told that I need to pay taxes on my materials when purchased, but that I do not collect sales tax from customers, and as such, do not need to have quarterly / yearly sales tax filings with the state.
  7. hosejockey2002

    hosejockey2002 LawnSite Bronze Member
    Posts: 1,195

    This is an issue that varies state by state. I do not pay sales tax on items that are for resale, but I do pay tax on supplies, tools and equipment. In my state, services are taxable, so I charge sales tax on products and services.

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