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Billy Goat
01-30-2013, 04:24 PM
How do you bill a mulch job, lump sum or itemized? How do you factor in sales tax if you are legit and are tax exempt? Let say you buy 1 yard for $30 and charge the customer $70.

willshome
01-30-2013, 07:48 PM
Some people charge cost on mulch and just charge labor so the tax is already paid. Check if there is tax on labor in your state

SECTLANDSCAPING
01-30-2013, 08:48 PM
Some people charge cost on mulch and just charge labor so the tax is already paid. Check if there is tax on labor in your state

yeah I would tax the whole $70 but thats how CT is. We dont have to tax mowing but almost any other service we do.

Steve
01-31-2013, 11:52 AM
How do you factor in sales tax if you are legit and are tax exempt?

Do you have to collect sales tax on mulch in your area? What about the installation of it?

If you do on one of them, it might be better to itemize. If you don't, you could simply give one price.

dpld
01-31-2013, 05:58 PM
in my state everything is taxable so your options are if you are a registered sales tax collecting business is to use your sales tax exempt form with your vendors and then charge tax at the end the entire sale.

or if by chance you paid sales tax on the materials you purchased and have a receipt you can deduct the amount of that transaction from the total job and pay tax on the difference.

as long as the state gets their tax money they don't care if it comes from you or anyone else or any combination for that matter.

Billy Goat
02-01-2013, 02:55 AM
in my state everything is taxable so your options are if you are a registered sales tax collecting business is to use your sales tax exempt form with your vendors and then charge tax at the end the entire sale.

or if by chance you paid sales tax on the materials you purchased and have a receipt you can deduct the amount of that transaction from the total job and pay tax on the difference.

as long as the state gets their tax money they don't care if it comes from you or anyone else or any combination for that matter.

Can you give me a break down with numbers so I understand you correctly. Purchased 1 yard of mulch for $30 and sold the mulch for $70 installed. The sales tax is 6%. What would be the break down for business records and what would the bill to the customer look like?

Caskey Lawns & Landscapes
02-01-2013, 08:55 AM
This is by no means difficult:confused:

If you are going to sell your mulching service with installation included in your (per yard ) calculations , it would look like this....

10 yards/mulch $ 700.00
Sales Tax 42.00 ( my rate is 6%)
__________

Total $ 742.00


Hope this helps....................

dpld
02-01-2013, 11:06 AM
Can you give me a break down with numbers so I understand you correctly. Purchased 1 yard of mulch for $30 and sold the mulch for $70 installed. The sales tax is 6%. What would be the break down for business records and what would the bill to the customer look like?


as far as the customer and the state are concerned the sales tax would be based on $70 per yard X's the amount of yards used plus 6%.

whether you paid tax on the mulch when you bought it and charged tax on the difference of $40 per yard it works out exactly the same on the bill as if you charged tax on the $70 per yard.

the only real difference is the state already got tax on $30 dollars of your $70 per yard price through your vendor.

and when you do your sales tax monthly or quarterly return depending on how much tax you collected in a month you would just keep a tally of all the jobs like that you did where you paid tax on the material portion of the job and that would fall into the deductions line on your return.

for example, my state charges 7% sales tax and if i did a job like you did and charged $70 per yard x's 10 yards the total would be $700.00 + 7% with a grand total of $749.00. being that i paid taxes on the mulch when i bought it and the mulch was $300.00 i already paid $21.00 in sales tax which means i would owe another $28.00 in tax on the remaining difference.
i would still charge the customer the $749.00 and i would be reimbursed the $21.00 that i already paid.

if that is all i did that month using that as a example i would fill out my return stating that my gross receipts for the month was $700.00 and when it asked me what my deductions were if any i would put down $300.00.
then it would ask me how much tax i collected and i would say $28.00, which is on the $400.00 dollar difference between my gross sales and deductions.

in a sales tax report the deduction line is for amounts that are either non taxable or amounts where tax was already collected.

that is why you need to keep records on the materials you purchased and already paid tax on so in case you do get a audit you have your bases covered.

i know we all live in different states and some things are slightly different but one thing i am pretty certain on is that when a business becomes a state licensed sales tax collecting business that you get a state certificate of authority that has a tax registration #. you are also entitled to fill out the tax exempt form and hand that to all your suppliers to keep on file because you will be re-selling the product.
they do allow for a occasional deductions because they take into consideration that you may not deal with the same vendors all the time as well as you could be working for a church or something like that which is tax exempt.
they do frown on businesses that don't utilize the tax exempt forms as well as like i said it raises red flags if used too often.
it did for me when i started taking care of a large church and cemetery for the last 3 years and deducting 4k each filing.
even though it was all legit they still had to check and i still had to go through the crap of proving so.

if you are not a registered sales tax collector then do not by any means charge sales tax ever.
you will get in huge trouble by doing so if caught and if your customers found out you would be seen as a scoflaw scamming them out of more money.

as i said in a earlier post all the state is concerned with is getting their cut, my states cut is 7%.
at the end of the day all that translates to is they want 7% of all your sales and they don't care if it is all by you or a combination of you and your vendors. as long as the numbers add up to them getting their 7% of that transaction that is all they care about and that is why i can not stress enough how important it is to keep proper records.

sales tax is money that the customer pays and all you do is work out being the middle man between the state and the consumer.
if at any given point you are paying money out of your own pocket for sales tax then you are screwing yourself up big time.

Billy Goat
02-01-2013, 05:43 PM
Thanks dpld, your last comment really helped me understand how to factor in sales tax and how to report it to the state. I use to sell stuff on ebay for a profit and had to tax maryland residents 6% sales tax. I had a sales and use tax license and reported my gross sales along with tax collected. Now going into lawn service, I was a little confused when you factor in mulch plus labor and customer pays tax on installed mulch. Iam a good record keeper so I shouldn't have any problems. I was lucky and never got an audit from the state. I want to keep it that way.

I want to have my facts straight if a customer questions me why I add sales tax and more so why so much because of upcharge and/or labor cost. They might think Iam ripping them off if they found out you can buy mulch for $30 per yard and I charged them $70 per yard installed. Then taxed them on top of that. Iam sure I will lose some bids because of adding in sales tax.

SECTLANDSCAPING
02-01-2013, 05:54 PM
I want to have my facts straight if a customer questions me why I add sales tax and more so why so much because of upcharge and/or labor cost. They might think Iam ripping them off if they found out you can buy mulch for $30 per yard and I charged them $70 per yard installed. Then taxed them on top of that. Iam sure I will lose some bids because of adding in sales tax.

Well the mulch place would be charging them tax anyway. If they delivered it for say $30, they would be taxed on that too.

The autoshop,grocery store, electrician, plumber, would all charge tax on the total bill. So why would we be different?

dpld
02-01-2013, 08:23 PM
Thanks dpld, your last comment really helped me understand how to factor in sales tax and how to report it to the state. I use to sell stuff on ebay for a profit and had to tax maryland residents 6% sales tax. I had a sales and use tax license and reported my gross sales along with tax collected. Now going into lawn service, I was a little confused when you factor in mulch plus labor and customer pays tax on installed mulch. Iam a good record keeper so I shouldn't have any problems. I was lucky and never got an audit from the state. I want to keep it that way.

I want to have my facts straight if a customer questions me why I add sales tax and more so why so much because of upcharge and/or labor cost. They might think Iam ripping them off if they found out you can buy mulch for $30 per yard and I charged them $70 per yard installed. Then taxed them on top of that. Iam sure I will lose some bids because of adding in sales tax.

sales tax should have no bearing on you getting jobs or not.
it is not optional, it is the law.
if someone don't like paying the tax then they should take it up with the respective state they live in and if someone is getting a job because they are cheaper because they did not charge sales tax then they are cheating and not running legit.

i also would not be too worried about someone finding out you are paying $30.00 for a yard of mulch and then charging $70.00 per yard for install because there is mark up and they would be a fool to think you would be charging what you are paying for it.

people like us are in business because other people are either too lazy or have the income and means to afford to pay us to do it so they don't have to.
but it all comes at a price to them by having to spend more to get it done.

we are in business to make money and money only. we all start out thinking we are gonna change the game and be mr nice guy but being mr nice guy don't pay the bills and all those wonderful friends you make in business won't mean piss on a ant hill if you can not pay your bills.

when you focus on money and you start making money, good money, on a consistent basis then everything else will fall into place and then you will be mr nice guy because you are doing good and have no pressures or worries because the money is there.

but to get back to taxes you charge your 6% based on the total job and materials costs and then you bill accordingly.
the only thing left to do is figure out if there are any portions spent on materials that already had taxes paid on.

the state is only obligated to being paid once for tax and are not entitled to double dip so if it was paid through a vendor you can bet your bottom dollar that i will be deducting it because i refuse to pay them twice.

willshome
02-01-2013, 10:31 PM
The auto shop,grocery store, electrician, plumber, would all charge tax on the total bill. So why would we be different?

Very true and they all charge big labor
Auto shop - brake pads cost $20 but installed $90+ and take 20 mins.
Grocery - brownie mix $1.49 but in the bakery $4.99
So why would we be different?

Billy Goat labor costs money and most people know it.
Mulch is hard work no one wants to do, so don't feel bad making a living

Billy Goat
02-02-2013, 02:58 AM
The autoshop,grocery store, electrician, plumber, would all charge tax on the total bill. So why would we be different?

When it comes to most autoshops and grocery stores, resturants etc, they give itemized receipts, which customers can dispute any portion of the bill. With electrians, plumbers etc they mostly give lump sum bills which the customer can not see the break down. I agree that lawn service should fall under lump sum billing since labor is added to material cost, then sales tax is applied on top.

willshome
02-02-2013, 08:40 AM
itemized receipts,
And you can to just don't itemized your bid/quote down to parts & labor just
"mulch $90" then itemize the receipt at the end of the job "mulch $30, Delivery & install $60"

SECTLANDSCAPING
02-02-2013, 12:40 PM
When it comes to most autoshops and grocery stores, resturants etc, they give itemized receipts, which customers can dispute any portion of the bill. With electrians, plumbers etc they mostly give lump sum bills which the customer can not see the break down. I agree that lawn service should fall under lump sum billing since labor is added to material cost, then sales tax is applied on top.

I itemize. A few quotes I was told I was a few hundred over. I asked how many yards are the others installing? Is edging included? The person would respond I dont know its a lump sum. I would tell them well I dont know what theyre installing or if edging is included. You might get a inch of mulch with them. I'm installing 4.