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I am a startup. I live in Virginia, and we are required to tax products we sell (mulch, fertilizer, etc.), but do not tax services. How do I write up my receipts - I normally do not separate labor costs from products, but I guess I have to. What do you all do (ie. writing up mowing versus fertilization, which the fertilizer is a product)? Also, I am having difficulty figuring what my markup should be for products with installation. Is there a certain percentage you all use. I obviously do not want to over or under bid. Thanx for any reply.
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Hi lgarcia831,
That sounds like the way to go.I normally do not separate labor costs from products, but I guess I have to. -
I'm not sure how to answer the tax question. I guess if you just sell them mulch or fertilizer just add your 5%. I've used other landscapers for products and services before and they just billed me a straight price. I guess they have the tax figured in. I don't add tax in. As far as for the mark up on fertilizer and lime you need to find out what the comp. is charging in your area. By the way, since you are just starting out, you need a fertilizer and lime permit to be able to apply. And a good pH tester is a must!Comment
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It's always best to seperate them for tax purposes. I always charge taxes on the products, and as of last year also have to charge taxes on the delivery of all lawn and landscape materials (mulch, soil, chemicals, rock/gravel, plants...etc). If you're not collecting those taxes for the gov't from the customers then you can count it as lost revenue since the gov't will collect it from you anyway.Comment
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If you are using invoices, seperate things, line item invoice. Put non taxables on top, taxables on the bottom. Subtotal, tax, total. In NY, we have to collect tax on all of it. Hope this helps.Comment
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That's what I do. Also, it's very important that you file sales and use tax exemption certificates anywhere you buy materials (Nurseries, supply stores, Lowes, etc). Otherwise you're paying sales tax on the item twice. You can download the form here.If you are using invoices, seperate things, line item invoice. Put non taxables on top, taxables on the bottom. Subtotal, tax, total. In NY, we have to collect tax on all of it. Hope this helps.
It's the ST-10 form.Comment
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Thanks for your replies
Thank you all for your timely replies. I will separate taxable products from nontaxable services from now on. Also, thank you RRS for answering another question I had - why should our customers pay double tax for items WE purchased from stores and were already taxed. In other words, how do we tax ONLY our markup portion of the product...The ST 10 Sales and Use Tax Certificate of Exemption takes care of that problem. Thanx
I wish there were a book or website that would guide new businesses with correct startup procedures and locations for correct licensing... from sales tax id, fed tax id, insurance, advertising options, permits, do's and dont's (ie. mailbox restrictions), accountant expectations and sample fees, tax deadlines, etc. to make it easier for us. We should start a thread with website locations and books specific to individual states (guidelines, permits, licenses etc.), and another for federal requirements. That way we keep up to date with changes also. Just an idea.Comment
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Take a look here. www.sba.govI wish there were a book or website that would guide new businesses with correct startup procedures and locations for correct licensing... from sales tax id, fed tax id, insurance, advertising options, permits, do's and dont's (ie. mailbox restrictions), accountant expectations and sample fees, tax deadlines, etc. to make it easier for us. We should start a thread with website locations and books specific to individual states (guidelines, permits, licenses etc.), and another for federal requirements. That way we keep up to date with changes also. Just an idea.Comment
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If you are paying sales tax when you purchase non inventory items to deliver and apply to a customer, do you need to collect sales tax for the state?Comment
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You shouldn't be paying sales tax on anything you buy, then resell to a customer. Not to say that I've never done it, but 99% of the time I buy materials from suppliers that have my exemption cert. on file.If you are paying sales tax when you purchase non inventory items to deliver and apply to a customer, do you need to collect sales tax for the state?
The state is vigilant too. In the past two years I've had the state revenue agents literally come to my home office twice. The first time was becuase I had filed with the Dept. of Taxation early before my business officially got started and I hadn't sent in the state withholding even though the tax was $0 ($10 fine). The second time they audited my books. I had an accountant the second time so I told them to call him. There turned out to be no problem, but it was still a pain in the butt, and I was pretty worried even though I didn't have any reason to be.Comment
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