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HDfromTX
04-28-2010, 04:28 AM
So I got a new customer last week and now they want to throw me a curve ball. They want the standard lawn service (mow, edge, weedeat, blow). Im dealing with the wife because she works from home. I agreed to do their lawn but to be competitive I had to lower my standard price by $2. So the first time Im out she pays me by cash - which we all know is the best. So yesterday, I get a call from her requesting that she wants to be billed monthly by invoice and that she wants to pay with a credit card or by using paypal, which she knows I have because I told her I used to sell stuff online. I told her that I would be out Thursday at the set time and we could discuss everything face to face.

Now since I verbally agreed to lower my price to gain a customer, is there anyway to approach the lady and tell her now Im going to have to invoice with sales tax and a slight service charge for the use of a credit card. Her reasoning behind using a credit card was the cost of checks, now I do understand checks cost money but isn't service fee for credit cards like 3% to the seller. She almost makes me feel like she doesn't want to pay anything but expects the world when it comes to her lawn maintence. She has made reference that she has had like 3 lawn guys since moving into her house 2 years ago. Everytime I think about catering to her billing and payment needs, Im thinking about what she has done to get rid of 3 lawn guys... kinda frustrating.

I know its all about confidence in your company. But, how do you approach a hopeful customer and tell them that what we agreed upon isn't going to work and that if we can't agree on this then we are going to have to part ways?

Thanks in advance - I think the easy thing about the lawn care business is the physical part - its the customer service, marketing, billing and other day to day stuff that makes it hard enough that you wanna give up!!!

The Cleaning Doctor
04-28-2010, 07:37 AM
I don't get it, why do people constantly cut their own throats by not charging tax on cash transactions? Mess up and one audit and you are finished.

Be professional and be legal ALWAYS.

As far as changing your rate again,,,,you are stuck if you want to keep her as a customer.

Monthly billing pays in advance.

I get people that try the cash thing all the time and all I tell them is that when it hits the bank it all converts to plastic.

Steve
04-28-2010, 12:24 PM
Hi HD,

This is all a learning process and I feel your pain with this.

Do you feel like you can have a talk with her and explain your position?

Do you feel you NEED this account? Can you still make a profit on this account if you continue further and get paid through paypal?

You gotta look out for the health of your business first or it won't be around for long.

What are you thinking now about all this?

MountainViewGreenskeeper
04-28-2010, 02:00 PM
Do you huys have a sales tax on service where your from? Im confused at your tax comments and questions.

bnclawncare
04-29-2010, 09:16 AM
So I got a new customer last week and now they want to throw me a curve ball. They want the standard lawn service (mow, edge, weedeat, blow). Im dealing with the wife because she works from home. I agreed to do their lawn but to be competitive I had to lower my standard price by $2. So the first time Im out she pays me by cash - which we all know is the best. So yesterday, I get a call from her requesting that she wants to be billed monthly by invoice and that she wants to pay with a credit card or by using paypal, which she knows I have because I told her I used to sell stuff online. I told her that I would be out Thursday at the set time and we could discuss everything face to face.

Now since I verbally agreed to lower my price to gain a customer, is there anyway to approach the lady and tell her now Im going to have to invoice with sales tax and a slight service charge for the use of a credit card. Her reasoning behind using a credit card was the cost of checks, now I do understand checks cost money but isn't service fee for credit cards like 3% to the seller. She almost makes me feel like she doesn't want to pay anything but expects the world when it comes to her lawn maintence. She has made reference that she has had like 3 lawn guys since moving into her house 2 years ago. Everytime I think about catering to her billing and payment needs, Im thinking about what she has done to get rid of 3 lawn guys... kinda frustrating.

I know its all about confidence in your company. But, how do you approach a hopeful customer and tell them that what we agreed upon isn't going to work and that if we can't agree on this then we are going to have to part ways?

Thanks in advance - I think the easy thing about the lawn care business is the physical part - its the customer service, marketing, billing and other day to day stuff that makes it hard enough that you wanna give up!!!
I have several customers that pay me through Pay Pal. I tell them up front that there is a 3% processing fee to do so.
If the cost of checks are a concern, then mention to your customer that she can set you up with bill pay through her bank, that is free. Good luck!

jasonw
04-29-2010, 12:55 PM
So I got a new customer last week and now they want to throw me a curve ball. They want the standard lawn service (mow, edge, weedeat, blow). Im dealing with the wife because she works from home. I agreed to do their lawn but to be competitive I had to lower my standard price by $2. So the first time Im out she pays me by cash - which we all know is the best. So yesterday, I get a call from her requesting that she wants to be billed monthly by invoice and that she wants to pay with a credit card or by using paypal, which she knows I have because I told her I used to sell stuff online. I told her that I would be out Thursday at the set time and we could discuss everything face to face.

Now since I verbally agreed to lower my price to gain a customer, is there anyway to approach the lady and tell her now Im going to have to invoice with sales tax and a slight service charge for the use of a credit card. Her reasoning behind using a credit card was the cost of checks, now I do understand checks cost money but isn't service fee for credit cards like 3% to the seller. She almost makes me feel like she doesn't want to pay anything but expects the world when it comes to her lawn maintence. She has made reference that she has had like 3 lawn guys since moving into her house 2 years ago. Everytime I think about catering to her billing and payment needs, Im thinking about what she has done to get rid of 3 lawn guys... kinda frustrating.

I know its all about confidence in your company. But, how do you approach a hopeful customer and tell them that what we agreed upon isn't going to work and that if we can't agree on this then we are going to have to part ways?

Thanks in advance - I think the easy thing about the lawn care business is the physical part - its the customer service, marketing, billing and other day to day stuff that makes it hard enough that you wanna give up!!!

You have horable luck with clients. I'm not sure everyone is out to get you like you make it sound. I have clients that will only accept a bill at the end of the month and will only pay at the beginning of the next month. They are some of my best clients. I also agree with the statement about not charging tax, First off in Tx do you have to charge tax for a service? I have never heard of that. Keep it legal and keep your transactions documented or go back to work for the man who will do it for ya. I even document my cash transactions, its not worth trying to save a buck for the IRS to shut you down.

HDfromTX
04-30-2010, 06:38 PM
Well to start this has all been a new learning experience for me. It has taken only a month for me to figure out how to correctly bill a customer and to cover all my expenses and taxes. I have taken a small loss when it comes time to set back money for taxes, this is something that I didn't figure into my quotes over the phone or verbal aggreements. This week I have taken on 6 new customers, I quoted them a price and tell them plus all applicable taxes. I have only had one customer question the fact that there is sales tax on a service.

Now onto my existing customers - If a customer has a set price, Im going to have to eat a little profit to cover the sales tax. I have put some thought into the situation and realized that I would be risking a few great customers over a few dollars. Like I said this is all a learning experience for me. Hopefully, by building trust with my customers they will be more flexible in the future with the taxes that I should be asking for. Im willing to take a small loss because most of my existing customers are bi-weekly and the sale tax would only be $5.00 a month per customer and right now I can't afford to lose them.

Credit Card Customers - While I haven't advertised this as a payment option, the one customer requesting declined the offer when I told her that there would be a 3% charge for it. She is also the one that I gambled on with introducing the sales tax charge. She wasn't thrilled about the intial thought of it but she said that she would have to pay it because I was the best yard guy she has had (she is a bit of a PITA and I can she why she has went through 3 guys in 2 years). After all the worries, I actually enjoyed cutting her yard this week - she stays on top of her fertilizer program and has an awesome yard. I think in the future I might as her if I could use her yard as my advertisement picture when I build a website.

Thanks again guys for all the words, and for all that read this far - IM TRYING TO BE LEGAL and DO RIGHT to keep my business in good standings for years to come!!! Im not trying to avoid the system, I think it takes some time to get your feet wet before your get everything lined out. On a positive note, I have kept great records and sorting everything out hasn't been a problem yet.

HDfromTX
04-30-2010, 06:53 PM
BTW - Google Lawn Care Sales Tax TX and you can read up on my dilema - Im self-employed and hopefully will make over $5,000 in the four calendar quaters this year. It reads that if you go over the $5,000 limit then you must begin collecting sales tax.

This might be helpful for anyone questioning their sales tax situation. A quick 2 second search found my answer, I wish it was that easy explaining it to customers that there is tax on service.

I have been telling them to google it but now I carry a copy in my truck if they should have any questions. I use a simply analogy by telling them it is the same situation as going to the store and buying stuff to make a hamburger or going to mcdonalds and buying it there - they dont tax you on goods that you have to make the hamburger with but they do tax you on the service when they prepare your food at Mcdonalds. Its really a basic analogy but most see what Im saying. I guess nowadays Texas is stepping up and waiting there cut of any service provided.

Steve
05-01-2010, 01:56 PM
Credit Card Customers - While I haven't advertised this as a payment option, the one customer requesting declined the offer when I told her that there would be a 3% charge for it.

I haven't check the paypal agreement but I think on credit card merchant agreements, you can't add an additional processing fee when accepting credit cards.

You might want to check this too because if you have a customer that makes a problem of it, you can lose your ability to process credit card payments.

bnclawncare
05-04-2010, 10:31 AM
I haven't check the paypal agreement but I think on credit card merchant agreements, you can't add an additional processing fee when accepting credit cards.

You might want to check this too because if you have a customer that makes a problem of it, you can lose your ability to process credit card payments.


Pay Pal charges 3% + $0.30 to receive payments. What I do is I add the additional 3% to the invoice when I send it to my customers and I tell them up front and in the invoice memo that the amount includes the 3%.

jasonw
05-04-2010, 11:05 AM
Here is what I found. I highlighted the important part, you SHOULD NOT be collecting tax until the quarter after you exceed 5K so there is no reason for you to be charging it now, my message will continue below.

Landscaping and Lawn Care Services

May 2003

If you do landscaping or lawn or plant care, you should be collecting sales and use taxes. Landscaping and lawn and plant care services include any work you do to maintain or improve lawns, yards and ornamental plants and trees.
Collecting Tax

You should collect state tax, plus any local tax (city, county, special purpose district or transit) on the total charge for these services.
Guidelines

Here are some examples that should help you decide which of your services are taxable. Of course, these examples don't cover every situation. If you have a question, call us.
Taxable Services

* Planting, transplanting, relocating and removing indoor or outdoor plants
* Identifying, preventing or curing plant diseases
* Pruning, bracing, spraying, fertilizing and watering plants
* Planting, mowing, trimming and edging grass or other ground cover
* Planting and maintaining flower gardens
* Trimming, spraying, and maintaining trees

Nontaxable Services

* Mowing pipeline or highway rights-of-way
* Trimming trees away from power lines
* Harvesting, cultivating, mowing and fertilizing farm or forest land
* Mowing cemeteries

You should separately state charges for nontaxable services from charges for taxable services. Otherwise, your total charge will be presumed taxable if the taxable portion is greater than 5 percent. You or your customer may overcome the presumption through documentary evidence that establishes the percentage related to nontaxable services. Your invoices or contracts should clearly identify the services you perform.
Landscape Designers and Architects

The professional services of landscape designers and architects are not subject to sales and use tax. These services include consultations, research, preparation of design plans and other engineering or architectural services. You should separate your charge for nontaxable professional services from any charges for taxable landscaping services, or the total charge will be presumed taxable if the taxable portion is greater than 5 percent. Again, you or your customer may overcome the presumption through documentary evidence.
Lawn Care and Landscaping by the Self-Employed

Lawn care and landscaping (other than pest control services requiring a license) are nontaxable when done by a self-employed individual who:

* does the actual lawn care or landscaping services;
* has no employees, partners or other persons providing the services;
* has gross receipts from the services of less than $5,000 during the most recent four calendar quarters.

If your income from landscaping and lawn care exceeds $5,000 during the most recent four calendar quarters, you must begin collecting tax on these services on the first day of the quarter after the threshold is exceeded. When your gross income from these services falls below $5,000 for the most recent four calendar quarters, the exemption resumes on the first day of the next quarter.
Construction

Landscaping services do not include the construction or repair of decks, retaining walls, fences or pools, or the installation of underground sprinkler systems. These activities are either new construction, or repair or remodeling of real property. Be sure to separate landscaping charges from charges for new construction or for repair or remodeling because different rules apply.

Nonresidential real property repair or remodeling is a taxable service. The service provider must collect sales tax on the total charge to the customer for materials, labor and other expenses. The service provider may issue a resale certificate to the supplier when purchasing materials transferred to the customer. Refer to Rule 3.357 regarding Real Property Repair, Remodeling, and Restoration; Real Property Maintenance.

No tax is due on labor to repair or remodel residential real property or to build new structures (residential or nonresidential). The type of contract determines how tax is paid on the materials incorporated into the realty. If the construction contract is lump sum (one charge, including labor and materials), the contractor pays tax when purchasing the materials and does not collect tax from the customer. If the contract is separated (separate charges for labor and materials), the contractor collects sales tax from the customer on the charges for materials but not for labor. A separated contractor may purchase the building materials tax-free by issuing a resale certificate. Refer to Rule 3.291 on Contractors.
Landscaping of New Residential Structures

Landscaping and lawn care are not taxable when purchased by a contractor or home builder as part of the improvement of real property with a new residence. This exclusion applies to the construction of model homes and speculative homes that will be sold for residential use, but not to an improvement being used as an office. For example, tax is due on landscaping of a sales office, even if it's located in the residential development. If you landscape a new residential structure for a contractor, you are responsible for billing and collecting tax until the contractor provides certification stating that the service is part of an improvement of real property with a new residential structure. If it is later determined that the work does not qualify as nontaxable, the person who issued the certification will be held liable for the tax.

The landscaping materials used for new residential structures are taxable. In a lump sum contract (one amount for materials and labor), the landscaper pays tax when purchasing the materials and does not collect tax from the customer. If the contract is separated (separate charges for materials and labor), the landscaper collects tax from the contractor or homebuilder on the charge for materials and can give a resale certificate when purchasing materials.
Materials, Supplies, and Equipment

Give a resale certificate to the supplier when purchasing fertilizer, plants, flowerbed edging, herbicides, and processed dirt, sand and gravel used in taxable landscaping or lawn care. These materials are transferred to the care, custody and control of your customer as part of your taxable service. When landscaping a new residential structure for a contractor or homebuilder, keep in mind the difference between lump sum and separated contracts in paying or collecting tax on these materials.

You must pay sales tax on the supplies and equipment used in landscaping and lawn care. There is no exemption for the purchase or rental of wheelbarrows, lawn mowers, string trimmers, gloves and other equipment, tools, and supplies.
Reselling a Landscaping Service

Sometimes you may hire a third party to provide some of the landscaping services that you sell. In that case, give the third party a resale certificate instead of paying sales tax and collect tax from your customer on the total charge, including the third party's charge.
Need More Information?

If you want the rules regarding the information you read in this bulletin, ask for:

* Rule 3.356 - Real Property Service;
* Rule 3.291 - Contractors;
* Rule 3.357 - Real Property Repair, Remodeling, and Restoration; Real Property Maintenance.

Need More Assistance?

* Email us at tax.help@cpa.state.tx.us.
* Call us toll free.
* Visit one of our local field offices.

94-112
(05/03)

As far as the paypal charges go I think it pretty petty to be honest with you. If your profit and loss is that close to the threshold that 3% will make or brake you then you are doing something wrong. So far after checking my numbers I am making about $100 for ever $20 spent. I think so far those are good numbers and I really dont care about 3%. The amount of clients that would use the service is not going to sent my to the poor house. Here is my best advice. Stop worrying about the little ****, do good work, get good clients and enjoy being your own boss. The IRS will NOT lock you up if you screw up your first years finances, trust me we all have done it but what they will do is make damn sure you know how to do it and do it right next year. ITs the same thing as contracts. People around these parts dont like them. Most people around here are still living in the past where a handshake is as good as gold. The LCO's around here that require them are sitting at home crying about losing there house while my "non contractual" services are taking all there clients. You can charge the 3% if you want but dont be surprised if you lose clients to someone who doesn't charge it, on top of that you can charge tax if you want but that is dishonest as it says in the text above you do NOT collect taxes until the quarter after you make at least 5K so dont be surprised if clients leave because of that to.

gonecountry
05-04-2010, 11:32 AM
Call me simple but I just accept cash or check and I put at the bottom of every estimate that payment is due after completion of services. If they are not home I leave a invoice in a designated area and it is expect before next service. If they request monthly billing, I do it that way, but I don't suggest it up front when giving an estimate because cash flow is a must when your just getting started out.

jasonw
05-04-2010, 11:53 AM
Call me simple but I just accept cash or check and I put at the bottom of every estimate that payment is due after completion of services. If they are not home I leave a invoice in a designated area and it is expect before next service. If they request monthly billing, I do it that way, but I don't suggest it up front when giving an estimate because cash flow is a must when your just getting started out.

Thats a good way to do things.