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Contract Problems

Discussion in 'Business Fundamentals' started by Mikelandscaping, Nov 19, 2004.

  1. Mikelandscaping

    Mikelandscaping Senior Member
    Messages: 129

    If i made contracts for my customers i was told that they would have to pay taxes on that and i wouldnt get any money. Can anyone help me on this?
  2. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Not true. Especially not sure what you mean by "i wouldnt get any money". You should declare what you make as income on your taxes, regardless. Whether you have a contract or not has no effect on that. If you have a do work for a company (commercial account), they can use the receipt you give them for a tax deduction, so you really need to declare income from those on your taxes.

    Simply add taxes to what you charge them.

    But why wouldn't you get any money???
  3. Plow Meister

    Plow Meister PlowSite.com Addict
    Messages: 1,174

    Whoever told you that is full of garbage. All a contract does is protect both parties in the event of circumstances, both unforseen as well as typical senarios. Contracts play absolutely no part in determining your tax liability or wether you are working as an independant subcontractor or as an employee of the person whom you are plowing for.
  4. TLS

    TLS PlowSite.com Addict
    Messages: 1,425

    My take on this......

    The guy giving you the info is assuming that you are pocketing the plowing money (under the table). Which you most likely are.

    By going legit, you have to make sure that after taxes you are still profitable. This is what I'm guessing he meant.

    As for sales tax......It would depend on the state. Here in PA, a LOT of things are taxable, however nothing related to snow service is.
  5. Langlois Enterprise

    Langlois Enterprise Junior Member
    Messages: 24


    In New York State you have to pay sales tax & income tax on your profit.
  6. TLS

    TLS PlowSite.com Addict
    Messages: 1,425

    Don't you mean..... Pay income tax on your profit, and collect sales tax depending on service rendered?

    You don't "pay" sales tax, rather, you collect it and transfer it to the states revenue dept.
  7. Mikelandscaping

    Mikelandscaping Senior Member
    Messages: 129

    I am still in school and i am doing this for myself. All I want the contract to mean is that ill be there when it snows. This will be my career as well as mowing so anyone got any more ideas
  8. landstroker51

    landstroker51 Banned
    Messages: 22

    dont do it.
  9. C.L.M. Inc.

    C.L.M. Inc. Junior Member
    Messages: 8

    hi mike. sound to me like the company you are trying to contract is giving you all the classic signs of the run around. Them telling you, you are not going to get paid is total bull. Sounds to me they are going to sign a contract with you and then when services are performed they are going to give you the classic excuse "We told you that you can not get paid" so i would be very leary about signing a contract. cause with a contract you have to be there otherwise you are in breach of contract weather they owe you money or not. So my personal advice is to wash your hands of these people and move on. Don't waste your time. there are plenty of other people who are willing to pay. let them get out there with some shovels and clear snow themselves. have a great holiday :salute:
  10. scuba875

    scuba875 Senior Member
    Messages: 250


    I screwed up and posted the same thing twice.
    Last edited: Dec 24, 2004
  11. scuba875

    scuba875 Senior Member
    Messages: 250


    I have some maintenance contracts with a couple of local amusement rental companies here in IL. We don't charge sales tax on a service but most companies in fact all that I have done work for, send a 1099 at the end of the year. Just as you would send one to a subcontractor for the money you pay out for his services. Where you get hit is in the self employement tax. When you work for a company as an employee they have to match your Soc Sec, Medicare, and federal taxes. Since you are working for yourself you have to make up the difference yourself. There is an upside to this. You can depretiate your equipment, and write off expenses such as fuel, repairs, tools ect. My advice to you Mike is PAY YOUR TAXES If you want to buy new trucks or house down the line. I made the mistake of not doing this when I was younger and it came back to haunt me.