What is the legal way to pass the sales tax paid for items on to your customers? Example: I am contracting to do a construction job. I purchase the supplies and complete the job. When the product is completed, and the customer is billed for supplies and labor, how do I include the sales tax I paid for the supplies in the final invoice?
2007-07-25 09:00:18 · 6 answers · asked by mizmead 4 in Business & Finance ➔ Small Business
We charge people a flat fee for labor and materials. When we create an estimate we calculate about what it will cost us for materials. Hence if we estimate $350 we charge that. If the actual cost is $375 then we make a better profit. If it is $325 then we eat the cost. Our installers are very good at estimating costs.
2007-07-25 09:27:10 · answer #1 · answered by idahoarchmage 4 · 0⤊ 0⤋
You shouldn't have to pay sales tax on the items you purchase for resale in your business. When you make the purchase, you should provide a tax ID to the seller. That would preclude you having to pay a tax on those items.
Having paid tax on some items, you should include it as a part of the cost of items when sold to your customers. You are aware that labor is not taxed so you can tax your customers for the labor you perform? But you can tax the materials. However, this only works if you have a tax ID and are legally authorized to collect taxes for the state in which you do business.
2007-07-25 16:23:12 · answer #2 · answered by livemoreamply 5 · 0⤊ 0⤋
If it's for building a house or something similar, you might not have to had paid tax in the first place - check with a CPA or call your state sales tax dept. You might be able to bring a salestax exemption certificate with you and be exempt from paying the tax and your customer wouldn't have to pay it either if the project is considered non-taxable by the state-check it out.
Do you have to show them your materials invoices? If yes, show them the total including the tax - is all I can think of, but find out the other thing first - possible you could get tax refunded from state
2007-07-25 16:07:37 · answer #3 · answered by Anonymous · 0⤊ 0⤋
The legal way is for you to obtain a resale license which gives you the ability to purchase items for resale (no tax). When you sell the items to your customer, you then charge them tax, and file the appropriate forms to pay the state.
2007-07-25 16:11:41 · answer #4 · answered by acook54 1 · 0⤊ 0⤋
You should be charging sales tax on your entire invoice. This will cover your supplies as well as your labor.
2007-07-25 16:05:16 · answer #5 · answered by Don 5 · 0⤊ 0⤋
That should just be included into the cost of the supplies and not billed separately.
2007-07-25 16:04:51 · answer #6 · answered by Anonymous · 0⤊ 0⤋