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Question on when to collect and pay taxes on plants

Discussion in 'Starting a Lawn Care Business' started by garden.nanny, Sep 20, 2010.

  1. garden.nanny

    garden.nanny LawnSite Member
    Messages: 29

    I am in Ohio. I have been asked to install some shrubs and trees for one of my clients in Ohio. The client had some shrubs/trees die and wants them replaced. This is not what I normally do - I usually only do maintenance services. I don't want to turn it down for another company to come in and install over the top of my servicing. I need to purchase them at the wholesaler because I cannot find the plants at a retailer. I have always purchased retail for customers so I do not have to deal with the tax. Then I charge my client a fee for my shopping service and let them pay for the plants from the nursery receipt.

    1- However, to purchase the plants wholesale what do I need to present to them? A Vendor's license? Or is a Service Vendor's License enough?

    2- If I am "installing" the plants, do I even charge sales tax or is it covered on my service tax?

    3- Do I need to hold a license in every state I purchase in? Which seems crazy since I am not installing in the same state I purchased the goods. Plus that would be impossible to pay Ky and Oh a cut....sorry if I sound confused but I am.

    4--If I purchase wholesale in KY and install the plants in OH how do I handle the tax reporting, who do I pay the tax to?

    Any and all help would be appreciated!:dizzy:

    CLARK LAWN LawnSite Silver Member
    Messages: 2,526

    you need a service vendors license to buy wholesale, you buy tax exempt and then collect the tax from customer. you are also going to need a nursery dealers license, yes you read that right. dont try to get out of the sales tax thing it must be a separate line on your invoice. i guy i know ended up out of business do to sales tax. ( he never collected or payed the state, got caught and they went to the day he started his biz and assessed it on everything he made. with interest and penalties he was over 100K in the hole to the state)
  3. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    It will vary from state to state. here we dont need anything But our sales and use tax permit to prove were in the business. we show that and presto.
    and we do not pay tax when purchaseing, we collect the tax from the customer then apply it like any other that we collect at the time we turn it in.

    I say at the time. because here in TX. if you collect 500.00 or more per month you will have to pay monthly.
    if NOT then it's quartley

    you need to find out for your state. like stated above. DONT SCREW AROUND WITH THIS
  4. MarcSmith

    MarcSmith LawnSite Fanatic
    Messages: 7,157

    what if....you bought them retail and then resold them to the the client. you have already paid sales tax...

    Or have the client pay for the shrubs directly, and then you only charge for labor to transport and install....

    one way around the sales tax issue...potentially....

    CLARK LAWN LawnSite Silver Member
    Messages: 2,526

    not here. also make sure you get your nursery dealers license. if the dept of ag catches you they will confiscate all your plants and by the time you get them back they will be dead.
  6. garden.nanny

    garden.nanny LawnSite Member
    Messages: 29

    Thanks everyone for the wisdom and info! I like Marc Smith's idea - that's pretty much what I have been doing. Why is that not OK in OH Clark?

    CLARK LAWN LawnSite Silver Member
    Messages: 2,526

    because of how the law reads, it clearly states that the "END USER" pays the tax onthe purchase. the only way you could do it without having to collect tax would be to have the customer have them onsite and you just plant them.
  8. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    If you DONT produce your Sales and use tax Number, then you will have to pay tax, then you will have to collect it, and pay it again.
  9. MarcSmith

    MarcSmith LawnSite Fanatic
    Messages: 7,157

    so if I pay 10bucks for a plant with a 6% sales tax. I pay the retail cost plus tax. 10.60 I then charge my client $10.60. no markup no fees. they are the end user. the retail sales tax has been paid...

    but in a nutshell, it would be hard to prove that you did not mark up the materials cost. but again if you have the client buy there material and pay the sales tax on it. they are the end user... they have paid the tax, you are just installing what they bought...

    the problem with doing it this way is that you lose the retail markup, which will add significantly to the profit on any job...
  10. starry night

    starry night LawnSite Gold Member
    Messages: 3,268

    Susan, I assume you are collecting sales tax for Ohio when you do your maintenance work. So why wouldn't you collect it on the plants, also.

    (For those of you not in Ohio, up until 20 years ago landscapers only collected sales tax on materials. The state needed more revenue and started applying sales tax to certain services, among them landscaping and auto repair.)

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