Need Advice Introducing tax to current customers?!

Discussion in 'Business Operations' started by Danny13, Jan 10, 2014.

  1. Danny13

    Danny13 LawnSite Member
    Messages: 37

    Hey All,
    well when i first started out 2 years ago i wasn't charging tax on lawn maintenance, so i would just charge 35$ lets say for a small yard an thats it. But as we grew as a company an now I am a LLC, HIC license, pay taxes ect i want everything legit an running the right way. I don't want to pay the taxes myself on this because why should i pay 2.5 or so lets say on a 35$ cut out of my pocket?
    whats the best way with my current customers to come across this? i know 2.5$ a week isn't much but i feel some people are gonna flip when they see it will cost more money. People are tight sometimes especially when you have joe shmoe out of a beat of truck doing it for cheaper because he is illegal.
    I was thinking of sending a letter to my current customers that come back saying as a curtesy for the first 2 years we paid the tax out of our pocket for them but now we have to charge it for legal reasons or something along those lines?
    My new customer will be easy to switch over.
    Any advice will be greatly appreciated,
  2. grass-scapes

    grass-scapes LawnSite Bronze Member
    Messages: 1,552

    I would probably say something along the lines that there is a state imposed sales tax for services which will begin showing on your next invoice. If someone asks why you haven't been charging it before, tell them you didn't know about it and were reminded by the state and you had to pay it.
    Its not entirely false, but it makes them think that the state is on you to charge it.
  3. easy-lift guy

    easy-lift guy LawnSite Gold Member
    Messages: 3,372

    Send a letter to your current customer list and explain that you are now required to collect sales tax for services rendered. DO NOT TELL YOUR CUSTOMERS OUT OF COURTSEY FOR THE LAST TWO YEARS YOU PAID OUT OF YOUR OWN POCKET. By stating this to your customers I believe you are setting yourself up for problems. Your customers do no need to know that you paid sales tax for the last Two years.
    Charge your customers what you need to and move forward.
    easy-lift guy
  4. Danny13

    Danny13 LawnSite Member
    Messages: 37

    yea i like this approach.
  5. Danny13

    Danny13 LawnSite Member
    Messages: 37

    yea your right, i think maybe I'm making a bigger deal then it really is? an i guess if a customer is really that bummed an wants to walk maybe thats not a customer for me ?..
  6. williams lcm

    williams lcm LawnSite Bronze Member
    Messages: 1,200

    How do you know the guy working out of a pickup truck is not paying taxes. Unless he is receiving all cash payments...witch I don't think they all pay in cash. Even then if your account gets an audit the truth will come out.
    Posted via Mobile Device
  7. Danny13

    Danny13 LawnSite Member
    Messages: 37

    There are plenty of guys working out of a pickup truck in every state that offer piss poor quality for dirt cheap an cash only. Not saying all guys out of pick of truck do this but there are many..
  8. easy-lift guy

    easy-lift guy LawnSite Gold Member
    Messages: 3,372

    The guy in the pickup truck is not the OP'S responsibility. Since the OP has already stated that he has paid the sales tax in the past he is now passing on this cost to his customers. If the OP is audited he should be current and will remain so by charging the sales tax. The guy in the Pickup can really take care of him self.
    easy-lift guy
  9. nightshutter

    nightshutter LawnSite Senior Member
    from UT
    Messages: 513

    I'm assuming you checked with your states tax commission to see if you are able to charge sales tax on a SERVICE in your state? In my state it's considered "REAL PROPERTY" and it can't be taxed. Only if I'm selling materials that I'm not installing. Like retail.
  10. Johnny79

    Johnny79 LawnSite Member
    from Jersey
    Messages: 106

    I would just charge the sales tax. Who ever questions you tell them sorry my accountant says any sevice we provide we have to charge sales tax or we will face fines and penaltys for not doing so. People who dont question you dont bring it up

Share This Page