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Old 09-23-2010, 09:18 PM   #1
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Question Sales Tax

Just started a new business and was uncertain how I would apply sales tax to a flat rate job. For example you quote someone $2000 for a 200 amp service do you add the 7% sales tax to that invoice? Or do you figure the sales tax into that price?

Thanks

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Old 09-23-2010, 09:22 PM   #2
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Just started a new business and was uncertain how I would apply sales tax to a flat rate job. For example you quote someone $2000 for a 200 amp service do you add the 7% sales tax to that invoice? Or do you figure the sales tax into that price?

Thanks
You wouldn't charge sales tax on that if it could be considered a capital improvement.(st-8)

Go take one of the states free seminars on sales tax,it is worth it.

And hire an accountant

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Old 09-23-2010, 09:23 PM   #3
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You only have to charge sales tax on repairs. Anything considered a capital improvement doesnt get taxed. YOu already pay sales tax on material when you buy it. DO you have a good accountant that you can talk to about this...? If you have quick books you can set up repairs as a line item so it will make it easier when you do you quarterly taxes....
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Old 09-23-2010, 09:51 PM   #4
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Now that's funny, how long has then been your signature.

Good luck on the business, I'd be scared scatless to start a business in this market, hell I was scared when I started in a good market.
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Old 09-23-2010, 10:30 PM   #5
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Just started a new business and was uncertain how I would apply sales tax to a flat rate job. For example you quote someone $2000 for a 200 amp service do you add the 7% sales tax to that invoice? Or do you figure the sales tax into that price?

Thanks
The smart move might be to consult your accountant.
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Old 09-24-2010, 07:20 AM   #6
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Can someone give me a example on how you would tax a service call/repair? Do you tax the labor only or both the labor and material?
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Old 09-24-2010, 07:23 AM   #7
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I buy my material and tax is paid. Here we are not required to charge sales tax to the customer. I add 25% to my materials on big stuff and 50% on small things. Add labor and give invoice to customer.
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Old 09-24-2010, 07:38 AM   #8
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The way it has been (I was told this may be under revision) was that if you sold materials as part of a total project, you pay the sales tax when you buy it.

If you sell the material without installation, you charge the customer sales tax and remit it to the State.

A friend of mine who used to sell docks and install them quit installing them and didn't change the way he did taxes. Since he was no longer installing, he was supposed to collect sales tax separately and he didn't. When a State audit caught this, he was on the hook for about a quarter of a million dollars.

Don't take the word of anyone on these forums, know the laws in the State you work. Talk to a good accountant.
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Old 09-24-2010, 08:08 AM   #9
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Default Wirpullr

Here in Michigan contractors are considered the final comsumer and we pay tax on material when we buy it and thats the end of it. But I would still check with someone in your state that knows.
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Old 09-24-2010, 08:13 AM   #10
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Can someone give me a example on how you would tax a service call/repair? Do you tax the labor only or both the labor and material?
Gamit - I am not familiar with the tax laws of NJ but the best advice I can give you is to seek council from your accountant or your state comptrollers office.

I can promise you one thing, if you do wrong and happen to get audited, telling the authorities that "the guys on ET told you to do it this way" will not be an excuse.

If you do not have the money to hire an accountant you may want to revisit your decission to go into Electrical Contracting.
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Old 09-24-2010, 09:34 AM   #11
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Here we just charge sales tax on labor if it is a repair. No tax on labor if it new or remodel and we just pay sales tax on the material when we buy it. I thought that was funny for here and didn't realize other states did the same.
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Old 09-24-2010, 12:03 PM   #12
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In TX we have to charge on parts and labor in my understanding. However, most of work is out of state, so we don't charge it at all since we are not registered to collect in other states. We also do substantial subcontracting, and it is the GC's responsibility. Consumers use this method all the time--purchasing out of state to avoid sales tax.

We do have a sales tax resale certificate, so we don't pay tax on material from the supply house and are thus relied upon to charge it to our customers for state collection purposes. I thought most businesses did this, and surprised to hear you guys are paying tax on your material and are not charging it.
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Old 09-24-2010, 12:23 PM   #13
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Gamit - I am not familiar with the tax laws of NJ but the best advice I can give you is to seek council from your accountant or your state comptrollers office.

I can promise you one thing, if you do wrong and happen to get audited, telling the authorities that "the guys on ET told you to do it this way" will not be an excuse.

If you do not have the money to hire an accountant you may want to revisit your decission to go into Electrical Contracting.
I have a accountant,just have not got around to asking him. I was just hoping there were a few contractors here from NJ that could shed some light on the subject.
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Old 09-24-2010, 01:35 PM   #14
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I have a accountant,just have not got around to asking him. I was just hoping there were a few contractors here from NJ that could shed some light on the subject.
Rob and Kirk gave you all the info you need.
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Old 09-24-2010, 07:05 PM   #15
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The Small Business Administration does offer free seminars for small businesses.

Try here for more information. Not sure how close you are to Plainfield but they have them there. Good luck.
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Old 09-24-2010, 07:11 PM   #16
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I never registered for sales tax.. any repair is paid in cash.. but don't tell anyone..

J/K for those of you who would love to drop a dime on me..
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Old 09-24-2010, 08:18 PM   #17
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I never registered for sales tax.. any repair is paid in cash.. but don't tell anyone..

J/K for those of you who would love to drop a dime on me..
Thanks for everyones imput and suggestions. Now after reading all the posts and NJ link for sales tax I'm pretty sure that if you do not make service calls there is no need to ever pay the state sales tax. You just need to carry those exemption forms and hold on to them for 4 years.
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Old 09-24-2010, 08:33 PM   #18
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The Small Business Administration does offer free seminars for small businesses.

Try here for more information. Not sure how close you are to Plainfield but they have them there. Good luck.
I'm actualy 10 minutes from plainfield and currently working in your neck of the woods at the bayway refinery.
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Old 09-24-2010, 09:14 PM   #19
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I'm actualy 10 minutes from plainfield and currently working in your neck of the woods at the bayway refinery.
Really? What type of work are you doing there?
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Old 09-26-2010, 05:30 AM   #20
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Really? What type of work are you doing there?
pipe work

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