sales tax

Discussion in 'Business Operations' started by OSU 09, Mar 12, 2009.

  1. OSU 09

    OSU 09 LawnSite Senior Member
    from Ohio
    Posts: 292

    Do you guys put sales tax on your services or do you work it in to the basic cost and pay it out of the total you get? I am in the process of making myself an offical business, so here is the story. We own a family landscaping business, mostly maintenance, some small installations. My father started doing this about 20 yrs ago, but he just did it part time, so he never bothered with getting an LLC, or sales tax or anything like that, when tax time came we just wrote it off as supplemental income from a business when my parents did up their taxes for the normal jobs. Now I am graduating this year with a degree in Landscape Contracting & Construction I will be taking over the business and expanding (which is working out real well so far :cool2:), and am in the process of making everything offical, switching the insurance over to my name, setting up an LLC, all that good stuff. So how do you guys handle sales tax?
     
  2. LB1234

    LB1234 LawnSite Gold Member
    Posts: 3,210

    I'm no tax expert but it sounds as if you are confusing sales tax with state income tax. Sales tax is in fact collected for your state and then paid to your state, whether it be monthly, quarterly, etc. If you paid sales tax at the end of the year there would usually be pretty big late fees and finance fees associated. Not to mention if he was never an official company I don't believe he could legally collect and remit sales tax. In jersey you have to be registered with the state in order to collect/remit sales & use tax.

    To answer your question, we charge (collect technically) sales tax on top of the actual costs...but you have to be careful about your laws/regs and what is isn't taxable, tax exempt work like capital home improvements, and so on.

    I do on occasion "include" sales tax within the cost. That's basically for when I'm snow plowing and someone flags me down to plow there driveway. I tell them a price and say its cash (since I don't know them and I don't want to jot down all there info to send a bill and not get paid). Therefore, when I go back to the office I write up an invoice for the labor AND the sales tax to equal the amount given at the time of service. These customers never receive a receipt anyway so its no big deal, its just to make my paperwork work out easier, they are wrote up as a cash transaction in quickbooks anyway.
     
  3. OSU 09

    OSU 09 LawnSite Senior Member
    from Ohio
    Posts: 292

    Sorry if I sounded confusing. I know the differnece between sales tax and income tax, I was just using the income tax statement as an example to reinforce the fact that we were never an offical business and taxed as one. My real question was just about the sales tax, but I thought it would help to give a little history (it probably would have had I not been so confusing :hammerhead:) thanks for the response
     
  4. Think Green

    Think Green LawnSite Silver Member
    Posts: 2,746

    Follow Ohio's State Tax Laws. Certain tax's appropriate what services you perform. Federal tax I.D. and State I.D. are two separate entities.
    Do you have a CPA yet????????
    Better get one!--- learn who,how they are and watch your own finances.
    Check every penny that you turn in and every quartely sheet you get.
     
  5. jhastrello

    jhastrello LawnSite Member
    Posts: 105

    Ditto: you need to check with your state.

    In Texas, labor is non-taxable. Plants, mulch, trees, etc. (sold and installed) is taxable.

    So in my state - if I sell a bag of mulch for $7.50 installed, I charge 8.25% on the whole $7.50. If I charge $4.00 for the bag, and $3.50 to install, I only charge sales tax on the $4. Makes it a little 'dicey' on how you quote it.

    For me, in the example above - I quote $$$ for xxxx cubic feet of mulch, installed. Tax on all of it. I'm using the thought process of - 'I don't want them to be able to simply state - I'll buy the mulch and you install it'.

    Keep the paperwork simple, and file when you need to. Here, it's quarterly. You don't want to get behind. They will file a lean on you in a second. Not good.
     
  6. CLARK LAWN

    CLARK LAWN LawnSite Silver Member
    Posts: 2,526

    everything is taxed in Ohio. sales tax MUST be listed as a separate item on the invoice once you get your sales tax # then you can buy your materials tax exemt.
     
  7. Hoots

    Hoots LawnSite Senior Member
    from DFW
    Posts: 327

    Not hijacking, but jhastrello, look at this link for Texas.

    http://www.window.state.tx.us/taxinfo/taxpubs/tx94_112.html
     
  8. kootoomootoo

    kootoomootoo LawnSite Platinum Member
    Posts: 4,369

    There is a list of landscape related things in OHIO that legally you are not supposed to charge sales tax on.
    Its on the states website.
     

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