How do you bill and deal with sales tax if you have to pay it in your state?

MowDaddy

LawnSite Fanatic
Location
Grand Rapids, MN
it’s $65 tax included

you take your $65 and you apply your 3%
Which is $1.95
If it’s $60 plus tax
It’s $1.80
So there’s a titanic difference to the point where you need to do calculations on the invoice?
No

that’s WHY you just include the tax in your price
So you don’t bother doodling with all that minutia

Lol ok
 

andersman02

LawnSite Bronze Member
Location
Snowy MN
Have had some people question the tax after we tell them it will be $60.00. then when they get the proposal that has tax as a line they ask. 99%
They never have problems with it though, kinda an error on our part forgeting to say $60 + tax. Our area, people expect it to be taxed unless the previous company was not line iteming it.
From an accounting standpoint. When our accountant comes in, we simply run a report from our software that shows how much tax was charged for County. I think if you included tax in your price this might get muddy.

also the fact that you may get charged tax on the whole $65 (that did not have tax split off) not the $60, as someone else said.
 
OP
Ironman1088

Ironman1088

LawnSite Member
Location
Pittsburgh, PA
Have had some people question the tax after we tell them it will be $60.00. then when they get the proposal that has tax as a line they ask. 99%
They never have problems with it though, kinda an error on our part forgeting to say $60 + tax. Our area, people expect it to be taxed unless the previous company was not line iteming it.
From an accounting standpoint. When our accountant comes in, we simply run a report from our software that shows how much tax was charged for County. I think if you included tax in your price this might get muddy.

also the fact that you may get charged tax on the whole $65 (that did not have tax split off) not the $60, as someone else said.
Do you bill at the end of the month?
 

DLL LLC

LawnSite Member
Location
Pennsylvania
So you would build the sales tax into your price and round up to an even number...so for example, if you think the yard is worth $60 instead of charging the $3.60 sales tax just quote them at $65. This is my first time dealing with sales tax just unsure the best way to approach it...thx
Im in Pennsyvania as well. Let me shed some light on our wonderfull sales tax system. In PA the tax is calculated per item that is taxed, not on the total of the bill. $0.02 cents is the minimum sales tax. So for example, if you sell 4 $0.25 items, sales tax collected should be $0.08 not $0.06. If you calculated it on the total of $1 (4x $0.25) you would be $0.02 short of the tax you were obligated to collected. This Sales Tax Break rate is usually what gets business audited here in PA (I spent 15+ years as a business consultant so thats how im aware of all this). DO NOT ROUNDUP or include in the price. Break it down because the rounding up will result in not enough tax being collected and also, by breaking it out of your price, GOD forbid there is ever an udit, you will be happy its on one easy report. WE use Yardbook for our CRM and its great. Free and handles everything we need, including credit card processing. WE typically bill monthly for lawn mowing, 1st of the month for previuos month. ANd remember in PA, as a licensed contractor, you cannot accept advance payment unless its for material. Any advance payment for service is actually illegal according to our State's Consumer Protection Act.
 
OP
Ironman1088

Ironman1088

LawnSite Member
Location
Pittsburgh, PA
Im in Pennsyvania as well. Let me shed some light on our wonderfull sales tax system. In PA the tax is calculated per item that is taxed, not on the total of the bill. $0.02 cents is the minimum sales tax. So for example, if you sell 4 $0.25 items, sales tax collected should be $0.08 not $0.06. If you calculated it on the total of $1 (4x $0.25) you would be $0.02 short of the tax you were obligated to collected. This Sales Tax Break rate is usually what gets business audited here in PA (I spent 15+ years as a business consultant so thats how im aware of all this). DO NOT ROUNDUP or include in the price. Break it down because the rounding up will result in not enough tax being collected and also, by breaking it out of your price, GOD forbid there is ever an udit, you will be happy its on one easy report. WE use Yardbook for our CRM and its great. Free and handles everything we need, including credit card processing. WE typically bill monthly for lawn mowing, 1st of the month for previuos month. ANd remember in PA, as a licensed contractor, you cannot accept advance payment unless its for material. Any advance payment for service is actually illegal according to our State's Consumer Protection Act.
Thanks for the response. I also have Yardbook and just getting familiar with it. So you are saying when I put the invoice in for mowing (4) times for that particular month set the tax rate at 8% not 6%? I love how Yardbook can generate the report for you...all of this is making my head spin. Thx
 

DLL LLC

LawnSite Member
Location
Pennsylvania
Thanks for the response. I also have Yardbook and just getting familiar with it. So you are saying when I put the invoice in for mowing (4) times for that particular month set the tax rate at 8% not 6%? I love how Yardbook can generate the report for you...all of this is making my head spin. Thx
No put it at 6% Just be sure to set the tax rate per service item. I also just direct message you.
 

Toro44

LawnSite Senior Member
Luckily my states tax rates are all the same for labor and materials. The only exception is new construction. With that being said my pricing is always x$ + tax. When I create the invoice in QuickBooks I type in the line item as x$ and it adds the sales tax as a separate line item. When I first started we thought people would care about being quoted an all in price, nobody cared but it was a pain on my end.
 

TPendagast

LawnSite Fanatic
Holy crap! I've been tax on alcohol for 50 years!
Ikr?

these people act like there’s some ripping of the fabric of reality!

Alaska as a state doesn’t have a sales tax
But when caribou Barbie started a sales tax when she was mayor of wasilla it did well

now we have alcohol tax here
Expecting sales tax overall within a few years at least in the city
 

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