WI sales tax questions?

Discussion in 'Starting a Lawn Care Business' started by mkarps, Jun 23, 2010.

  1. ncknaklawns

    ncknaklawns LawnSite Senior Member
    from NY
    Posts: 379

    In NY you get to subtract the tax for the mulch when you pay the sales tax. Because you'll be paying the tax again on the bill to the customer. You need to track your business expenses. Like on Schedule C.
    Equip and Supplies -separate out suplies for landscapping that are left with the customer
    Maint and repairs
    In NY plowing is taxable service.and it appears you have to pay tax on the gas twice. At the pump and in the contract.
  2. Smallaxe

    Smallaxe LawnSite Fanatic
    Posts: 10,081

    Start collecting sales tax now... $.05 for state + $.0051 for county(if that's what it is) = $.0551 X gross labor on every job = amount due...

    Year end total income before deductions = your sch C... and you will pays sales tax on all of it whether you collected it from the client or not...

    You really need a state tax number to do legitimate business in Wisco... In your situation, you may be put on a quarterly schedule...
  3. Smallaxe

    Smallaxe LawnSite Fanatic
    Posts: 10,081

    You can simplify it quite easily... If you buy 10 yds of mulch @ $20/yd, that is $200 + $11.00 sales tax...

    Just charge the client $211.00 for the mulch and itis a dollar for dollar turn around and nohing for you to do paperwork over.

    If you use your tax number you can get the mulch tax-free @ $200, then you RETAIL @ $300 + $16.50 = invoice to the customer... and send the money from the customer to the state...

    I invoice the customer for an extra hundred dollars in labor and keep it simple... :)
  4. zimmatic

    zimmatic LawnSite Senior Member
    Posts: 411

    Do this the correct way.
    Get quickbooks or another software package like this. Set up your business "corretly" send out invoices, collect payments, (including sales tax). Sent collected sales tax to state.
    If you go through a sales tax audit your #'s need to match there #'s and there #'s come from you. When they go back 5 years and want to see how you arrived at your gross sales reciepts and taxable sales reciepts do you think you can remember how you arrived at those #'s--NOPE but if you are detailed about placing things into quickbooks (etc) the computer can do the remembering for you.
    I went through a sales tax audit in July. They went back 5 years. All my #'s were perfect. In the end I was owed 1800.00 I charged sales tax for items that didnt need to be charged. I try to error on the side of caution I guess.
    Start doing all this now ---OH and go get intouch with a cpa a good one will help you with all of this.

    No disrespct---but quite trying to " just get buy" till whenever for whatever reason. If you ever get audited---even if your business goes out of business you will be happy knowing that its all properly paid, classified, and written down.
    Last edited: Mar 25, 2011
  5. Smallaxe

    Smallaxe LawnSite Fanatic
    Posts: 10,081

    Yes to invoice pad... No to quickbooks or cpa... It's not that complicated... you file on line and write a check... Your invoice pad needs to be totalled for your sch C, and it will be the exact amount as your sales tax becuz you determine that from your invoce pad...
  6. zimmatic

    zimmatic LawnSite Senior Member
    Posts: 411

    Small Axe

    Please do not take this the wrong way--Just advice.

    Its only a matter of time until you get audited. I knew my day was comming 3-4 years ago. Everyone was being audited, and my cpa confirmed that also. My day arrived and they didnt look at anthing on my tax returns. I locked them out of all things in my quickbook except for invoices and income statements. It took 1 day for them. Plus they had to do the adit at my cpa's.
    The state of MN is in a finacial mess as I hear WI is also. According to my CPA the state has hired an additional 50 auditers just for sales tax.
    If you are good at the invoice pad thing--great. I know I could never do it because to many items that get taxed and dont get taxed and diffrent taxing area's. I have 6 diffrent sales tax rates to track, collect and break out for the state.

    Again, this site is for sharing information. This is my 2cents
  7. Smallaxe

    Smallaxe LawnSite Fanatic
    Posts: 10,081

    Sales tax to your state's DOR, and Income Taxes to IRS, then again to State's DOR... All different...

    Sales tax on gross labor and anything you resale... If you pay taxes at the store then make it a dollar for dollar reimbursement... If you jack up the price you pay "Sales Tax" on the new price...
  8. Smallaxe

    Smallaxe LawnSite Fanatic
    Posts: 10,081

    I understand where your coming from, and for you it works as you need it too. This guy has a few jobs on the side and needs a tax number to be legal.

    No employees and hopefully, no retail... I record each monthly invoice on a quarterly report sheet that I made up, with a 'cumulative total' for gross income and the relevant sales tax.

    At the end of each quarter that column tells me how much I made and how much sales tax I owe... that is easily cross checked back to my daily record and invoice copys...

    I have 1 sales tax category to keep track of, because I only pickup materials for individuals, I never retail... If this guy gets going, then he can make that decision later, but it doesn't need to be cost prohibitive, just to get started with a number... :)
  9. ncknaklawns

    ncknaklawns LawnSite Senior Member
    from NY
    Posts: 379

    I have developed some elaborate excel spreadsheets and it is able to provide everything just need to copy into Forms, Depreciation, Schedule C, Schedule SE.
    For us in NY Sales tax is quarterly but runs Dec-Feb not on calendar year. Also they force you to round your Gross Income to nearest dollar. So there is always some extra change you need to add to income or subtract.
  10. HalversonCPA

    HalversonCPA LawnSite Member
    Posts: 1

    Just came across this topic via a google search, so thought I'd comment further for any future readers in Wisconsin. I am a CPA in Wisconsin.

    Yes, the OP would needs to obtain a seller's permit thru the Wisconsin Department of Revenue, pay WI sales tax, and file sales tax returns. The frequency of payment and filing will depend on your amount of revenue. The WI Dept of Revenue will tell you how often to file when the seller's permit is applied for (e.g., annually, quarterly, or monthly)... probably quarterly to start.

    However, for some on here with gross revenue less than $1000 per year, note that you would be exempt from charging or collecting sales tax as an "occasional" service provider. Exempt = you don't have to obtain a seller's permit or collect sales tax.

    Quickbooks is a nice program, but not necessary unless business grows well beyond what the OP is doing per year.

    Finally, it sounds like the OP probably ended up slightly overpaying in taxes if he decided to come clean for past income collected that year. He mentioned paying the taxes out of pocket. If he had $10,000 in income, then he probably paid $10,000 X 5.5% = $550 in sales tax because he thought he should have collected that amount. However, he would have saved a few bucks in a legit way by reporting $9479 in sales + $521 in sales tax = $10,000 collected. This would have saved him in income taxes at year end too.

    Obviously I recommend always discussing your business questions with your CPA to ensure the advice works for you specifically.

    I hope this helps.

    Visit us at www.halvcpa.com

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