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Sales Tax question

Discussion in 'Business Operations' started by BlueStarLawnCare, Jul 11, 2009.

  1. BlueStarLawnCare

    BlueStarLawnCare LawnSite Member
    Messages: 18

    Question for New Jersey businesses. The main reason is that in NJ, sales tax is assumed to be included in the price, and we have to pay sales and use tax on lawn cuts. Instead of raising prices next year, I am thinking about adding sales tax to the price of the cut. So a $40.00 cut would be 42.80. Of course, I would send a letter in advance advising my customers. Any thoughts or input would be greatly appreciated.

    Blue Star Lawn Care
  2. shovelracer

    shovelracer LawnSite Silver Member
    Messages: 2,008

    I would greatly advise talking to your accountant about the matter. We have always made sales tax a line item and it is not included in any price we offer. You arent charging sales tax you are collecting it for the state.
  3. grandview (2006)

    grandview (2006) LawnSite Gold Member
    Messages: 3,465

    In NY that's how it's done here. 40.00 plus tax.
  4. lawns Etc

    lawns Etc LawnSite Silver Member
    Messages: 2,277

    7 % additional unless they are paying me cash. I know that you are still supposed to collect and pay but cash is king to me.
  5. BlueStarLawnCare

    BlueStarLawnCare LawnSite Member
    Messages: 18

    Shovelracer, It is not a matter for the accoutant, I know I need to collect it. My question is how do you guys think the customers will react to the change.

    Grandview and lawns Ect, have you guys always done it that way, or did you change after starting service? If you changed after, how did your customers react?

    I appreciate the input from all. I bought into the business as a partner a couple years ago, and this year my partner decided he did not want anything to do with it. So I changed the name, and now it is all mine. Adding tax would make it easier to figure out tax collected, and also increase my income slightly. Just wondering if anyone would be complaining.

    Thanks again.
  6. grandview (2006)

    grandview (2006) LawnSite Gold Member
    Messages: 3,465

    It's NY people just assume they have to pay sales tax. If someone does ask tell them it;s the law and you have to do it.
  7. grandview (2006)

    grandview (2006) LawnSite Gold Member
    Messages: 3,465

    You do have a FIN number so you can file with the state?
  8. shovelracer

    shovelracer LawnSite Silver Member
    Messages: 2,008

    In the end you are talking about a 7% price increase. This is the issue. If the market isnt bearing a 7% increase than you are beat. I think your biggest issue is going to be that some might think you are trying to cheat them through tax if they were not previously under the impression that they were paying tax. This is why most of us separate it. You can clearly show what you make and what the state gets. You will still get the annoying ones that think you are keeping the tax or something, but you can tell them that it is decided in the voting booth and you are just doing what you are supposed to.

    I still believe that it is an accountant issue because you have been making poor book keeping practices IMO. If you are not separating than you have no way of separating taxable and non-taxable sales. Your entire sales figures are then taxable even if they are not supposed to be. I believe you can do it either way still, but you may be collecting tax that you shouldnt and just increasing the cost to the customer and padding the state's pocket.

    Yes, maintenance is taxable as is labor, but there are a few things that are not.
  9. Roger

    Roger LawnSite Fanatic
    Messages: 5,938

    In some states, any invoice is required to make a separate line item for sales tax. You may choose to provide one price to the customer, and then back out the tax portion of the payment. But, if you state requires a separate line item, then you have not been in compliance with your taxation license. This is why it is either an accountant question, or a thorough search of your state's laws regarding this matter.

    You MAY have a bigger problem on your hands than trying to justify a 7% price increase to your customers. Maybe so, maybe not.

    Even if you are not required to make a separate line item, you will have a bigger problem explaining the change in billing to your customers. After they see a new items for tax on their invoice, their initial reaction will be "he hasn't been collecting tax before, why is he starting now?" They have no reason to think that you have been backing out the taxes from their payment, right?
  10. BlueStarLawnCare

    BlueStarLawnCare LawnSite Member
    Messages: 18

    All good points, and thanks for the input.

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