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Sales Tax???

Discussion in 'Business Fundamentals' started by snyps, Oct 3, 2006.

  1. snyps

    snyps Senior Member
    Messages: 101

    So I have been plowing for the past 8 years, and this is my second year with my own equipment. I am not in this full time, I have a normal 40+ hour job (computers). I mainly sub contract but have been getting into doing some of my own contracts. This year I have 5 people signed up for about $1500 in total services.

    Should I charge sales tax and figure out how to pay it, or should this just be a little side thing? Also if I wanted to be completly legit, how do I go about it?

    I am in the WNY area if it matters any..

  2. Big Dog D

    Big Dog D PlowSite.com Addict
    Messages: 1,134

    Sales tax is only on products that are sold and not services. As long as you are not billing out the product seperately you don't need to worry, provided you are paying the tax when you buy it.

    ie; Sanding service that is preformed for a customer; If you bill and list it on an invoice as just a sanding service at $150 you are all set. If you bill it and itemize it as, Sand truck and operator .5 hours @ $100 and 2 yds of sand mix @ $50 per yard you are obligated to charge and pay the sales tax on the $100 product used.

    I learned this via a Sales Tax Audit courtesy of Uncle Sam!!! It's about as much fun and as revealing as a Colonoscipy(sp?) :eek: :eek: :eek:
  3. Mick

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

    Check on state laws regarding sales tax (use your computer's browser search engine), some states require sales tax only for the sale of goods (such as selling salt to be used by the consumer - not when you spread it), other states requires sales tax on goods and services (such as snow plowing). Regardless income from any source needs to be reported on your income tax. If you want to be legitimate, check with a lawyer in your area - you may need a special license or a locality business permit. Your state may require a license or permit. You definately need to be properly insured - Commercial Vehicle and General Liability.

    There is no such category as "a little side thing" - if you engage in commerce, the laws apply to you the same as any full time business.
  4. snyps

    snyps Senior Member
    Messages: 101

    I have the Insurance, 1,000,000 Commercial Auto, 1,000,000 General Liability, and another umbrella becasue I own rental property (Main reason for the equipment). I just try to make some cash on the side to pay some more expenses.

    Thanks for the advice
  5. Mick

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

    But is "Snowplowing" listed on the GL policy? Without that as a "listed activity" you are not insured.
  6. snyps

    snyps Senior Member
    Messages: 101

    Snowplowing, and property Management (worked as a catch all for other things, landscaping, etc.).
  7. DaySpring Services

    DaySpring Services PlowSite.com Addict
    Messages: 1,065

    Plowing is covered on my GL policy. Also if you want a business name or dba you have to go down to the Rath building and fill out the paper work.
  8. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    You forget where you live. New York is the land of taxes, if you do work for money you collect sales tax. (8.75) Now if you don't want to and get caught, it will be big payup for the fine.
  9. Big Dog D

    Big Dog D PlowSite.com Addict
    Messages: 1,134

    You guy's have sales tax on labor and services too???
  10. jax1013

    jax1013 Senior Member
    Messages: 114


    Absolutely yes to tax on snowplowing services...I learned the hard way too...Any accounts that you get payed by check you bill out sales tax. In NYC the amount is 8.375%...Just let the customer know upfront that you don't charge it...your just forced to collect it..
  11. sgoalie23

    sgoalie23 Member
    Messages: 62


    Just commenting on the sales tax issue. Here in CT clients pay sales tax on labor, material, services.... you name it they pay it. Luckily for them it's only 6.00% unlike New York. My Uncle keeps complaining about sales tax and his property tax!
  12. Big Dog D

    Big Dog D PlowSite.com Addict
    Messages: 1,134

    Here in MA. we only have to pay sales tax on Items(physical tangible objects) that are sold, not labor or services.
  13. Turfmower

    Turfmower Senior Member
    Messages: 376

    that is because sale tax is run by the state not the federal gov. Here in NJ we just got jump from 6% to 7%. and landscaping no longer can take the capital improvement exemption. You pay tax on plants and charge client tax on the labor and profit. you need to apply for a resale in you state and they will give you certificate and tax laws. Not being an official business makes you a fly by night.
  14. snyps

    snyps Senior Member
    Messages: 101

    Can you tell me how I pay the sales tax. I know your company, one of the bigger and better operations in the area, I trust you on your business knowlege.

    Thanks for any input.
  15. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Start with # 1-800-972-1233 it's the NYS tax dept.
  16. mike33

    mike33 Senior Member
    Messages: 335


    As Mick stated check your local and starte laws they all vary. I live in W.Md. One mile from Pennsylvania and 4 miles from west Virginia, as a landscaping contractor i do business in 3 states. In W.Va. material and labor is subject to state tax. Pa. does not recquire licences for what i do and i do very little work there i do keep up with them. How ever in my earlier life time i had an auto body shop business and on ins.claim work out of Pa. they added 6% tax on labor. So check out your laws regardless of the posts you might see here.
  17. hickslawns

    hickslawns Senior Member
    Messages: 627

    Definately check with your state on this issue. In Ohio most service business's are required to collect sales tax. However, for snow plowing you only collect if you do over $6000 in plowing. I would hate to be the guy that found out he did $6000.01 at the end of the season and is liable to collect the sales tax on that first $6k. I never question it and collect it because we will do over $6k even in a winter like last winter which wasn't very good for snow. As stated above, check with your state and get legit now rather than after the snow is flying.
  18. tjlands

    tjlands Senior Member
    Messages: 579

    Thats sounds like a pretty stupid tax law, are you sure about that?
  19. Rcgm

    Rcgm Senior Member
    Messages: 613

    Same here in Indianapolis you can only charge sales tax on materials or items not labor and the fine is very SALTY:D

  20. hickslawns

    hickslawns Senior Member
    Messages: 627

    tjlands-Yep. Got the info in the mail from the state tax dept. Aren't most tax laws ridiculous though?