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Discussion in 'Business Operations' started by thomsoutdoor, Nov 3, 2007.

  1. thomsoutdoor

    thomsoutdoor LawnSite Platinum Member
    Posts: 4,443

    Here in Maryland beginning as soon as 2008 it seems to be likely that we are going to have to charge a 6% service tax to our customers. This means that when we cut someones grass for $30 we are going to have to add an additional $1.80. Not to mention the additional paper work. What a PIA. My concern is the business I may lose to companies that basically do this work on the side and the problem to collect the money. Anybody all ready experience this? Is their another State that does this?
  2. supercuts

    supercuts LawnSite Silver Member
    Posts: 2,785

    its been 6% tax on services as long as i can remember here. no biggie, i just put in my proposals, all work is subject to CT tax of 6%. might even help, when they sign it they $48, which turns out to be $50.88. the $48 is less of a mental shock then the over $50
  3. thomsoutdoor

    thomsoutdoor LawnSite Platinum Member
    Posts: 4,443

    Any problems with dealing with people who did this work on the side and don't charge a tax?
  4. supercuts

    supercuts LawnSite Silver Member
    Posts: 2,785

    im booked solid if that answers your question. of course you'll always loose some to the guy charging $20/lawn, but those are the customers i dont want anyway. anyone that questions pricing is on the prowl for a cheaper guy. comes with the territory
  5. JimmyStew

    JimmyStew LawnSite Senior Member
    Posts: 367

    There is talk (among politician types) about implementing a service tax here in Maine. The justification is that our economy is shifting from a retail to a service economy so states are not pulling in the same revenue from sales taxes. The logic makes sense but it is very frustrating that state governments continually find ways to charge more taxes (or in Maines case more "fees" so they can tell us how they didn't raise taxes!) rather than ways to spend less.

    A little off topic but in your post you stated that you put in your proposals "all work is subject to CT tax of 6%" Does this mean that you give a price to your customers of say $5000 to do a job and then give them a bill for $5300? is this the common way to charge on a set price bill? I have always included taxes in the price that I give.
  6. ed2hess

    ed2hess LawnSite Fanatic
    Posts: 13,192

    I think in our area it is required to make a seperate line item for the 8.25% tax. And the answer to the thread writer many didn't used to charge tax and took cash and probably didn't pay any tax on that but that is just life. Not many people want to pay cash, they want to auto deposit and they pay sales tax on everything now anyway so no problem.
  7. thomsoutdoor

    thomsoutdoor LawnSite Platinum Member
    Posts: 4,443

    Wrong assumption "ed2hess". I have been in business for over seventeen years and pay taxes. If my customers paid me cash I wouldn't be worried about the service tax. In MD we have never had to worry about a service tax. That seems to be changing and was curious what head aches I should be prepared for. I agree with "DARICEK LANDSCAPING".
  8. Roger

    Roger LawnSite Fanatic
    Posts: 5,922

    Do you mean "sales tax," or "service tax?" In PA, we have a 6% sales tax on some lawn work. The Dept of Revenue offers a document that explains what services are taxable, which ones are not.

    Nobody ever complains about seeing the tax on their invoice. They are accustomed to paying a sales tax on products bought a retail shop, and also accustomed to paying a sales tax on services other than lawn work.

    I use QuickBooks to manage my invoices. The provision is included in the customer profile, and the item list of services being offered. A service may or may not have a sales tax requirement. When entering the information about the work completed, the tax is rolled into the totals. I have prepared a customized invoice, and list the sales tax as a separate line item at the bottom of the invoice.

    For cash customers, you either need to ask for the tax money to be added (e.g. $42.40 for a $40 job), or set your price so that the total includes the tax. The amount for the task completed will be an odd amount, adjusted so that the task amount, plus the tax amount, will equal the round number (e.g. $50.00).

    The tax amounts must be sent to the Dept of Revenue each quarter, or each month (depending on the amounts). But, QuickBooks keeps track of the tax money due, so the submittal is an easy thing to do. Your fear of "lots of extra paper work" is unfounded.
  9. thomsoutdoor

    thomsoutdoor LawnSite Platinum Member
    Posts: 4,443

    This is a service tax not a sales tax. This is something new being proposed by our new Governor. This includes everything from Hair cuts, maid service, funeral services to accounting. Everything except lawyer fees. Don't figure. I am sure it won't effect my business that much , like "DARICEK LANDSCAPING" said. Its just more paper work for which I am all ready buried in and for the most part I am tired of being taxed more and more. Just had to vent a bit. Also he is raising our gas tax.
  10. Roger

    Roger LawnSite Fanatic
    Posts: 5,922

    Here are a couple of articles:

    A larger one that talks about the expansion of sales taxes,


    And, a smaller one that talks about the possibility of landscaping:


    From my reading of these stories, the proposal is a SALES TAX expansion plan on services, one service that may be included is landscaping. Only a couple of places did I find the use of SERVICE TAX, but within the context of an expansion of an existing sales tax to include more services.

    My point is that software you using to operate your business will probably process a sales tax on your services. The same situation exists in many other places, so Maryland will not be unique. To refer to my previous post, processing the sales tax within the QuickBooks program is very easy, absolutely no other paper work. The software calculates the amounts and makes an entry for you. Even the monthly submittal of taxes uses the roll-up of all taxes collected, telling you exactly what to pay from your collection. PA Dept of Revenue will only collect these tax monies through e-filing (no paper, no checks). The funds are electronically transferred. The whole process takes 10 minutes each month, perhaps even less. And, there is no impact (read: extra work) on the daily recording of work, and no impact on the monthly billing. This is a routine matter that your software is prepared to handle. Heretofore, you have not had reason to investigate.

    I'm not disagreeing with your hostility toward new taxes. Don't get me wrong. From the articles, the state is looking for new sources of revenue -- what else is new? However, I'm only telling you that the work required on your part to process the transaction is very, very small, and most likely, not one piece of paper involved.

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