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Discussion in 'Business Fundamentals' started by JeepPlow18, Oct 29, 2006.

  1. JeepPlow18

    JeepPlow18 Senior Member
    Messages: 658

    I am not starting a business but I will be plowing on the side. I will be getting checks for the plowing that I do on a commercial lot and was wondering how do I handle that? Should I be charging the owners tax on the bill? and if so how do I pay it? Thanks in advance
  2. DBL

    DBL PlowSite.com Addict
    Messages: 1,310

    im not from nj so i dont know check and see your local or state policy on taxing your services its not a product so its not that tax so check it out
  3. Mick

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

    If you are getting paid for plowing, you ARE starting a business. Whether you charge taxes is a state matter. You need to declare ANY income on you federal tax return. Most do not charge tax as a separate item on the bill, but you still need to declare it on your tax return. In case you misunderstood, you "pay it" on your federal tax return.

    The exception to this would be if you decide that plowing is a "hobby". You would still declare all income, just the deductions are figured differently.
  4. DBL

    DBL PlowSite.com Addict
    Messages: 1,310

    if youre getting at if youre going to have to pay taxes then most likely the company that youre plowing for will 1099 you as a independant contractor
  5. JeepPlow18

    JeepPlow18 Senior Member
    Messages: 658

    So DBL, you are saying that I dont have to worry about it just claim it on my tax return?
  6. bterry

    bterry Senior Member
    Messages: 183

    What's the question about, sales tax or income tax?
  7. JeepPlow18

    JeepPlow18 Senior Member
    Messages: 658

    Its about whether I need to pay taxes because I will be getting payed with a check from my commercial lots. Also how to claim and pay it when the tax season comes around.
  8. Mick

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

    Yes, you need to pay taxes but not just because you're getting paid by check from commercial accounts. But there are a couple of aspects of your question that are leading to some confusion.

    You will need to pay income tax on any money you earn, whether it is from commercial or noncommercial accounts and whether it's by check, cash, barter or beer. Being in check form simply means it's easier for the IRS to track in case of an audit. This not billed to the customers as the amount of tax is determined by all money taken in. You may need to pay sales tax on certain items. You need to check your state laws to determine what you collect sales tax on. Sales tax is usually billed as a separate item to the customer, but might not be (Maine tax law, for example, has a provision which states that you can include the sales tax in the purchase price - effectively not charging sales tax, although you submit sales tax to the State - but you cannot inform the customer of this before the sale).

    Payment of taxes from sales and self-employment income are usually paid quarterly, but in some instances may be semi-annual or even annually with your tax return. The best way to determine which you need to do is to get an accountant for the income taxes and with the State revenue department for the sales tax payment requirements. There are penalties for underpayment of taxes and the accountant is really the best way to determine if you are likely to be penalized.
  9. tjlands

    tjlands Senior Member
    Messages: 579

    In NJ snow plowing is taxable and has to be listed as a line item on your bill.
    If you get "1" check for doing commercial plowing you are a business. Since they will be writing you a check there will be a paper trail leading to you.(IRS)
    If you are plowing in NJ you really should get insurance and a tax id number after all it is the lawsuit capitol of the world.
  10. DBL

    DBL PlowSite.com Addict
    Messages: 1,310

    you can charge sales tax to the lots you plow

    also income tax will be reported as they are saying well we payed jeepplow18 x amount of dollars to plow our lot so thats why we dont have that money anymore to cover their butts so in return the irs says ok were gonna tax jeepplow18 for that money
  11. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 9,883

    The commercial account will send in a 1099 form to the IRS stating how much they paid you.
    your customer does not need a tax id# for this just your name and SS#
    This is your taxable INCOME.

    The business will send you a copy of it(the 1099) for your income taxes.

    Sales tax is a different animal. A tax ID# is for collecting and paying SALES TAX not INCOME TAX
    Here we do not collect any sales tax on a service as no goods exchanged hands.

    INS and a tax Id# are a good things to have. but if you want to protect your self (personal property) from law suits
    organize your business. ie a LLC company.
    Last edited: Oct 31, 2006
  12. tjlands

    tjlands Senior Member
    Messages: 579

    My point was that in the Great State of NJ.
    To Collect sales tax you must be registered with the state
    and to register you need a tax ID number.
    And since snowplowing is taxable in NJ
    you must have a tax number to snow plow legally.
  13. Rampart Ranger

    Rampart Ranger Senior Member
    Messages: 165

    If I understand this correctly NJ collects SALES tax on services. I can understand that one must pay state and/or federal INCOME tax on receipts of services, and SALES tax on materials delivered - but SALES tax on services?

    Maybe that's why NJ is no where I want to do business!
  14. tjlands

    tjlands Senior Member
    Messages: 579

    Yes thats right. Sales tax on plowing...but not on clothes.
    But on the flip side you guys are always talking about the ridiculously high prices we get for snow plowing. payup
  15. Bry@n

    Bry@n Senior Member
    Messages: 159

    Is this one of the new taxes or has plowing always been taxable? Just formed a LLC and the accountant is just informing of all of this now. Before the LLC, never had to worry about it. Hey, it's all part of doing busioness I guess..
  16. tjlands

    tjlands Senior Member
    Messages: 579

    Does that mean you never collected sales tax on plowing?
    Yes I have been plowing and collecting sales tax on plowing for over 15 years.
  17. JeepPlow18

    JeepPlow18 Senior Member
    Messages: 658

    Thank you tjlands for the advice now the subject is very clear.