Could this be considered an overhead cost

Discussion in 'Business Operations' started by Ocutter, Apr 21, 2001.

  1. Ocutter

    Ocutter LawnSite Senior Member
    Messages: 314

    I was wondering if any taxes are a form of overhead. For instance, sales and use tax. I have a general idea of how much to send in every 1/4. Every year it will keep going up as long as the business increases. For next season can I add this onto my fixed overhead costs?
  2. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    Payroll taxes on that labor that is put to G & A would be considered overhead. Sales and use tax on materials used in your work are a direct expense. Sales and use tax on G & A expenses would also be overhead expensed.

    Depends on were such taxes fall on the balance sheet.
  3. LoneStarLawn

    LoneStarLawn LawnSite Bronze Member
    Messages: 1,415

    sorry to sound stupid, but what is G & A?
  4. BRL

    BRL LawnSite Bronze Member
    Messages: 1,211

    The tax that Ocutter is referring to is the NJ State Sales & Use Tax and is not an expense, it is a liability. As a certified agent of the state you are simply collecting the sales tax due for services rendered, and then forwarding it to NJ. The sales & use taxes for materials & other expenses that John mentioned are usually already included in the receipt or invoice you receive for that expense, and it is not necessary to separately track the tax from the expense. I can't remember exactly what G & A stands for but it refers to your General Ledger?
  5. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    General and Administrative expenses. On a financial statement prepared by your outside accountant, this will be a separate sheet detailing non-direct expenses. These include Salespeople, postage, office help, marketing expenses, advertising. These expenses are figured into your total "net profit" (before taxes), but are not included in the "gross profit" compilations. G&A expenses are deducted from the gross profit dollars (along with depreciation dollars) to provide you with a net profit for the business.

    Not included in G&A expenses is anything that is a "cost of goods sold" - which are all direct expenses and shown on a separate sheet titled "Cost Of Goods Sold". These include landscape supplies, plant material, small tools, seed, mulch, etc., anything that goes into the actual work onsite.

    Add a secretary and her wages goes into "G&A". So does building rent, telephones, gas, electric.

    Purchase a tree for a job and that goes under "Cost of Goods Sold".

    Does that help ??
  6. thelawnguy

    thelawnguy LawnSite Silver Member
    Messages: 2,411

    Dont know how this relates to the question, but as far as federal tax return is concerned, amounts collected as sales and use tax are not included in gross sales, nor are they deductible as a business expense. As another pointed out, you are just the agent taking the tax collected from one hand and passing it to another.
  7. Ocutter

    Ocutter LawnSite Senior Member
    Messages: 314

    John- to add on to your secretary reference, would a co. mechanic fall in the same category? I understand the passing of the hands with taxes. Thanks
  8. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    It is my understanding that some put it in Direct Cost, and some put it into G&A. We choose to make it part of the overhead so it's spread out amongst the different divisions within our company. However, I'm told that either way is acceptable accounting.

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