This is question for company owners , In Excavating how do you charge your customers taxes, do add it on the end of the bill , sounds stupid I know But need the help, Thanks KMS
when we buy material we always pay the tax inless it's a tax exempt job. and just charge the custmor for the material and mark material up when you can. Alot less paper work. You don't need to charge tax when you are working with your equipment because it's a service. Hope that help:usas
Many excavators,masons,plumbers,etc. don't get sales tax. If it's a repair,it most definitely is taxable,a product such as fill,topsoil is taxable.If the job is for new construction{I'm going here by NY laws},if the client fills out a capital improvement form,it will then be tax-exempt.The onus is on the client if the form was completed correctly if you should get audited.Other tax-exempt forms I use are resale certificates and school,religious,not-for-profit,gov't exempt type forms.Sales tax always gets calculated at the end of the bill,just like any other bill.
You're completely wrong---any service is taxable---it's only not if the service you are doing meets ALL the criteria on the Capital Improvement form or some other tax-exempt form because basically you are doing new construction of some sort.Try telling a sales tax agent in Albany that services aren't taxable---he will ask for directions to your office faster than you can say Oh S***!!!
Sorry i guess i should have said that a little different you are absolutely right you do need to have a capital improvement form in order not to charge sale tax. Which like you said most off the time you are doing new consruction i should not have said service. ointhead
Thanks Thank you fellows i Aways get good advice here Thanks Again KMSEXC
So new home construction is not taxable and and existing homeowner work is taxable, what do you charge tax on the final cost of job So a Builder calls me and says I need a cellar dug for a new home I know i don't charge tax on that project just pay IRS on profit , A Home owner calls says they need a waterline installed or septic system I quote them a price and Then add Tax On it Does that sounds Right
Reember, Each state has its own tax laws. Just because its that way in NY, where the answers are from, does not mean the same applies in CT, where you seem to be. Just a heads up. I would do some more research. If you are doing taxable work, I think it should go right on the invoice.
I think I understand your question, as a owner, if I showed I added taxes, on work performed and tax on supplies, I would lose about half of my customers. They dont like to pay tax on anything (who does) so I just show everthing as a total excavator work-$2800.00 dozer work- $1200.00 supplies- $856.97 Im not saying, dont charge taxes, just dont show it. In my state you dont have to charge taxes on machine work. Just my 2 cents worth
Doese every one normaly charge tax on labor? I mean if you buy pipe stone building supplies and mark them up then your charge tax on them .home owner,builder buys them but you install no taxes.
One thing everyone needs to do here is get their terminology correct. You, the contractor do not charge sales tax, the State does. You are simply acting as a collections agent for the State as required by law. State laws vary, so not all answers seen here will apply to everyone. cat320, in NY the answer to your question if I'm understanding it is yes, you must collect tax on labor unless the job is a capital improvement.
I agree with Steve on thid one because I have lived in a few different states. What works in one state will not work in another. Here where I live certain items are taxable while others are not. As painful or boring as it might be it would definately be worth the time to sit down a learn the basics. It will possibily save you down the road from a mess!:Banghead
well Im glad I asked this question, I think this will help a lot of us, keepem coming still not clear on this topic KMSEXC
I agree Thats Part of it, I like your Idea But If you don't charge taxes on machine work how do you pay your taxes, out of your profit, Man its tough enough out there with the cost of equipment fuel labor materials, I think we have to charge tax on our job profits if you don't charge for it you lose money Thanks for reply
Very good response Steve and just a little extra now,very surprisingly NY has just raised the amount us ''vendors'' are allowed under the ''vendor collection credit''. As an example,2 weeks ago when I filed the Dec.'07--Feb.'08 sales tax quarter,I helped make NY about $1,800 richer,to which I was able to keep app.$80 for my 2 hours worth of work.Not to shabby for a gov't. worker huh?
I Here You on that one You right a big mess
So again,basically a repair is taxable,but new construction is not,BUT ONLY if you have a properly filled out Capital Improvement form.That basement for the builder or the water/septic for Joe Homeowner needs that cert. if you don't want to charge them tax.Again now,I'm in NY--I'm reciting NY law--yours might be different.Just remember,a builder does not enjoy any special privileges--if he doesn't want to pay sales tax he needs to prove to the state why he is exempt.Your job as the vendor is to make sure that happens--you are acting as an agent for the state.Also remember,the state will most definitely take your money if you should erroneously charge someone sales tax--they will NOT point out to you that you did not have to charge that client the tax.
ya i will have to check into my state rules , So if the builder hands me an exempt form, I get paid from him Theres no taxes relayed to irs
Taxe Im not crazy about it, but I just have visit the IRS and get a lesson on charging tax and paying tax
IRS has nothing to do with sales tax, your State Tax Commission is the place to ask questions about that. The IRS only deals with income tax.
Income Tax is my question Thats My question Federal Income Tax,
So what is the question?
I'm suddenly lost.....
Who's on first? No,he's on second.
My question is with Federal Income taxes, say you contracted a job at ten thousand dollars, cost of materials were six thousand dollars, labor was one thousand so that leaves you with three thousand dollars how much Income tax come out of your three thousand dollars Sorry just trying to find a better way to mange my taxes I Keep waiting until April to pay my taxes and I'm getting whacked, I need to pay quarterly
KMSEXC, I would suggest, that if you don't already, get an accountant. I started my taxes on my own and after some advise from an accountant I had done some work for, he saved me way more than he cost and he was way more aware of the tax laws. However make sure the accountant you is familar with doing the taxes for the type of bussines your in.:my2c
Asphalt Thanks for reply It seems its hard to get an accountant that knows the construction business But you right , part of it is my fault with bad record keeping Its one thing to do the const work but its another to run the buisness i will have to work on that end this year thanks again KMSEXC
I think for most of us the paper end of the business can prove to be the hardest. I made myself a plan where I used to work since I was way more of a fieldman than an officeman. I to stop saying "I'll do it later" and made it a point to do an hour or so everyday so that if I walked into the office 2 weeks later I didn't have an overwhelming pile of papers on my desk to go through and file; approve; or whatever. Now out on my own I don't have as much B.S., but I spend 2hrs once a week and I am way more organizied than I have ever been. Not saying this method can work for everyone but by forcing myself to do it for awhile just turned into a routine for me that made my life alot easier.
Key Thats The Key, alot of guys just think of the work on the site, and bury their heads in the sand when it come to office work , I'm going to take your advice and find a manager or Take time myself but its hard to convert over to an office person when you been in the trenches , a day on the site take alot out of you I'm sure you can relate Thanks Again KMSEXC
First of all, I am no accoutant but I have too much experience paying taxes. If you made $3K on a job of net profit, then depending on your tax bracket, which being a small business means somewhere in the range of 30-40% of net profit, you would have a tax bill of $900 to $1200 for this project - kinda sucks doesn't it. This is where you need an accountant to be sure you get the tax deductions you deserve. Equipment depreciation, insurance, workers comp., office expenses, phone, etc,etc are all deductions that need to be itemized because you are spending this for business and you for darn sure don't need to be taxed on these items. The senario you described is gross profit not net profit. All of the above mentioned items and several more, are deducted from your gross profit to determine your taxable (net) profit. Hope this helps.
Thanks For the Help, Im getting it now, A partner I dont Need
No problem!:drinkup That's what HEF is all about. "The partner I don't need" - ain't that the truth. We have a silent partner named Uncle Sam that takes a chunk of everything we make yet they are never around when bills are due! Oohhhh boy - Don't get me started on taxes.........
Income tax and sales tax are two separate things. Sales tax is charged by you for your customer and added on to the invoice at the tax rate for your county and state. Mine is 8.75%. This is paid back to the state either yearly or every 3 months. So December, January, February is paid in March and so on. Depending on the amount of tax you could pay it more often. I think if you pay it yearly it cost more to do so. FOr you to not charge sales tax in NY you need a tax exempt certificate and tax number for that customer and you have to keep this on file, this is true with sub work for another contractor. Home owners pay sales tax because no one yet has shown me a capital improvement form. This comes from the county and all this does is offset the sales tax until they sell the home and then they have to pay the tax anyways. If you pay the sales tax when you buy material you can just add it in to your price and not charge the customer for it so it does not get paid twice. My wife does all this so she knows a lot more than I do about it. Income tax is the money you owe The USA for working hard and making a profit. The best way to pay as little as possible is spend all your profit on your business and then you won't have any taxable income, that’s what I do :Banghead
Thanks For The reply Greatly appreciated KMSEXC
Jmac---whether you're working for a builder,contractor,or home owner--the sales tax laws apply to all the same.If I work for a home owner,such as the $9K waterproofing job I'm doing right now,I supply the capital improvement form for them {the client actually is really supposed to,but it doesn't matter--just being a nice guy},as long as the job meets all the criteria for being a capital improvement,the job is tax exempt.Some material,such as stone,BRG,that I supply,where I have filed a resale cert. with the vendors---when I file quarterly,I now pay that sales tax under'' Purchases subject to use tax'' on the tax form.
Thanks Tuney, qustion for ya, if you buy BRG, stone and you have a tax exempt resale form filled with the gravel pit, and the pit sells you stone with out tax charged, then you sell this to the customer are you adding tax on the invoice? If not then then the tax is never collected. I was also told that the capital improvement form only puts off the tax until home owner sells the home and then the tax is collected anyways. Is snow plowing taxable, I charge sales tax for this. I would rather error on the side of charging too much than not enough. What is the criteria for being a capital improvement? If you charge sales tax in error on a job that you should not of charged tax for that 8.75% could be yours, wonder what the law is concerning this? I was also told that if you don't collect the tax you chould have to assume the tax as yours to pay. To be perectly honest I think most don't charge it and most don't pay it. Why be a collection agency for the state? I also know some guys that charge it and do not pay it back, they keep it. I was told that trucking is not taxable just the material so depending on how you price your material out, more trucking than the cost of the material this would change the amount collected.
Jmac---yes,absolutely you charge the customer sales tax on aggregates. I think you were given some redneck type explanation there on the house selling tax.What tax are we talking about.Doesn't matter though as the capital improvement form allows a job to be tax exempt if these 3 conditions are met: A.''substantially adds to the value of the real property or appreciably prolongs the useful life of the real property,and B.becomes part of the real property or is permanently affixed to the real property so that removal would cause material damage to the property or article itself,and C. is intended to become a permanent installation.'' Snow plowing is a taxable service,services are taxable. If you err and collect the tax,but you haven't yet filed with the state,simply apologize and write up a new invoice--give the client back the tax collected.If you already filed,gave the state the tax collected for that quarter,month,year,whatever,you are SOL--the state will gladly keep your money,so if you're smart you'll keep your mouth shut and do the paperwork better next time.Yes,a contractor is responsible for sales tax due,if you get audited and can't justify why you didn't charge sales tax on a certain job, service,material, and that job is most definitely taxable,you will have to pay it.Good luck with going back to the client and crying--too late. As for some who don't charge sales tax--they are opening themselves up for a world of whoopass from the state when they get caught,and they will eventually.The principal,interest, and penalty could be staggering.Worse yet,are those you mention for collecting the tax and not paying it in.That is called STEALING---think how you'll look in stripes.Why be a collection agency for the state? Maybe because it's the law of the state--dead serious--we all are whether we like it or not--we are all bonafide tax collecting agents--part of the price you pay for working in NY.Really though,not that big a deal--just do your paperwork correctly and like my previous post,I even made some money last quarter under the ''vendor collection credit''. Trucking is taxable--again--it's a service,what you might have heard is that years ago,trucking was exempt,but now it's not,the material in the truck is also taxable.
You cannot charge your customer's YOUR federal taxes. Sales and use tax is a different thing entirely. Every business owner needs a good accountant and a course in basic business accounting doesnt hurt either. It took me a long time reading this thread to figure out what you were asking.
Sure you can. Your Federal taxes should be figured into your operating expense. Of course there is not a line item on your invoice for your taxes they are paying, but it should be figured into your overhead/cost of doing business. Every good or service you purchase from a large corporation has their taxes figured into the price of the good or service you are buying.
CM. dude, you are supposed to figure your tax liability into your operations costs, but KMS seemed to ask if he can charge his taxes as a line item to his customers. He cannot do that. The poor guy is new to the business, based on his questions, so in his sense of the question, he can't bill his customers for his taxes. It would be like telling your employer that they have to pay your Federal and State Income taxes.
I'd like to see where it says I can't add a line item for my taxes onto my invoice. I bet that I can add a line for anything that I want to. Fuel, materials, equipment wear and tear, Gatorade, boot allowance, chew, anything that I want can go on my invoice if I feel that the customer should pay for it. Now, does my customer want to see those things on an invoice? Heck no, it would just make them upset. BTW, your employer is paying your Federal and State income tax. It gets withheld from your gross pay and forwarded to the Feds and State, so yeah, they are paying it as part of what they pay you. It's all part of the big picture.
I bet the first time you put IRS taxes as a line item on your invoice, your customer is gong to call IRS, and you will get a sweet review of your books. And no, the employer does not pay the IRS as part of your pay, they DEDUCT the taxes from your net pay.
Why do you think that the IRS cares what the line item is named on your invoice as long as you pay the required income tax on what you earn? As long as your books are straight and they get their share of your net taxable earnings they shouldn't care. Now, if you are collecting sales tax as a line item and not turning it in to your state as tuney was saying, then you will be in trouble. Sure they are paying the tax, you aren't looking at the bigger picture. For example: Let's say you have a kid and you give your kid an allowance. Your kid goes to WalMart and buys a new CD. Who really paid for that CD? It was your customers employer , that's who. (Actually it's your customers employer's customer's employer... man it could go on forever huh...) It doesn't matter if you had your customer set up a separate direct deposit split account (i.e. line item) that was earmarked for your kids CD or not, but that's where the money is coming from. Anyway, where is the list of acceptable invoice line items on the IRS site?
I don't believe IRS has such a list. What I am saying is, if you put that as a line item on your invoice, your customer is likely going to call IRS. In turn, some government employee is going to say this is strange, what else could he be doing. They may find nothing wrong with your books, but I bet they would think it is worth looking into. It would be like going to Walmart, and your register slip saying CD 49 cents. Lights 12 cents, Shelf stocker 1.00, Wear and Tear on Parking Lot, 19 cents, etc etc. Not looking for an argument dude, just saying that breaking your IRS liability out on your invoice might not be the best way to go. Otherwise more people would do it. Plus, you can't really predict what your liability will be until you add in all of your deductions, etc. If you were to get a refund, would you want to go back to the books and figure out what percentage went to customer X?