posted
I was just wondering how other shops break down sales tax.
this is the way i do it. If i produce a $10,000 permanent sign for a business. if the material cost plus markup of those materials is say $2500.00 and the rest is labor, fabrication and installation, i break the sales tax down as follows...
materials....$2500.00 9% sales tax on material cost only...$225.00 design, fabrication labor....$6300.00 installation...$1200.00
total selling price with tax...$10,225.00
in your area, how do you tabulate sales tax on a similar job?
posted
9% sales tax in Alambama? Them's New York rates. Anyways, your breakdown works for me. Usually I list materials on large jobs only and tax that part, as the rest is lettering, labor and fabrication. On smaller jobs such as magnetics and such, I just tax the whole thing as a product. The problem with taxing separate items as previously outlined is the customer may start to question certain items. You know, "That much for lettering when the board only cost....!"
-------------------- Wright Signs Wyandotte, Michigan Posts: 2785 | From: Wyandotte, MI USA | Registered: Jan 1999
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posted
thanks david for your quick response. yes 9% here in montgomery, alabama! the rate was 8% but the county added a so called temporary 1% sales tax to make up for cuts we had in education funding.
the above tabulation is for my use only, i never itemize it on the customer's statement.
also that is the way i do on smaller jobs as you mentioned, sales tax added to the total amount.
posted
Don't have to do a lot of thinking here in Texas. The whole job is taxable, whether you use $1 in materials or $10,000. There is no breakdown for materials and labor. Where I work the rate is 8.25%.
-------------------- Chapman Sign Studio Temple, Texas chapmanstudio@sbcglobal.net Posts: 6306 | From: Temple, Texas, USA | Registered: Nov 1998
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Wow! You have 9% sales tax? Them's Michigan rates! LOL!
We do work in two different counties here, Erie and Niagara. New York has a state sales tax (i honestly forget what it is but i think it is like 4.5%) and the individual counties add on the remainder to go to 7%. However, Erie county has added an additional 1% temporarily, for the last umpteen years, to bring it to 8%.
we have to keep three seperate tax list for the state. one for Erie county, one for Niagara county, and one for exempt sales. Exempt sales include sales to tax exempt orginizations (churches, schools, government agencies, etc.), native american sales, semi truck lettering and striping, and out-of-state sales.
New York state makes it easy for compulation of tax. Tax everything from labor to finished goods. We are. however, able to purchase materials tax free from our suppliers because we will ultimately collect the sales tax due.
We have to submit our sales tax records every quarter along with the monies collected during the previous quarter. The penalties are somewhat severe for being late. The minimum fine for being late is $50.00 plus a percentage of the taxes collected due to the state.
The state does allow the businesses to keep a percentage of the tax collected up to a maximum of like $100.00 for the quarter. Oh boy! Mighty big of them, huh? LOL!
Hope this helps you in some small measure to continue on through the daily grind we call life. Ain't it great?
Have a great one!
-------------------- Bruce Bowers
DrCAS Custom Lettering and Design Saint Cloud, Minnesota
"Things work out best for the people who make the best of the way things work out." - Art Linkletter
Posts: 6451 | From: Saint Cloud, Minnesota | Registered: Jun 1999
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posted
thanks everybody for the feedback. hey ray, so what you are saying is, on a $10,000.00 sign you would charge $825 in sales tax? this must be the law in texas.
there is a car repair company across the street from my shop, when they repair your car they only charge sales tax on the parts used, then they add on labor cost.
at the end of the year when i break down taxable and non taxable items, those totals determine what i will pay on my city, county and state license. labor, contractor and retail sales licenses for all three.
hey bruce, like you, i have to break down the gross sales tax and send a check to city, county and state. my sales tax return is filed on or before the 20th of each month with penalties fined if not postmarked on or before the 20th.
posted
you know it might help if you drew me a picture ray. and while you are at it, how about something explaining it to me on audio tape, is there a possibility i could get your new video, "How Raymond Chapman Charges Sales Tax"???
you think we are slow here in bama, you oughta hear what "they" say about texans.
posted
ray, oops,does that start with a capital "R"?
well heck ray, when in doubt search the internet...
from the Alabama Dept. Revenue website...
WHAT TYPE OF SALES ARE MADE WHERE NO TAX IS DUE? Sales of Exempt Items: Some of the more common items which are exempt are: prescription drugs, gasoline and motor oil (kerosene and fuel oil are taxable), fertilizer/insecticides/fungicides when used for agricultural purposes, seeds for planting purposes, feed for livestock and poultry (not including prepared food for dogs and cats), baby chicks and poults, livestock, sales to the U.S., State of Alabama and other governmental agencies of the State of Alabama, labor to repair or install property is exempt as long as it is billed as a separate item on the customer's invoice (labor to fabricate an item is not exempt).
well i guess that changes everything.LOL never mind.
i made a mistake.(that was the first one )
this job was contracted out and the company told me that this was the way to break down the sales tax.
i am about to bill the balance of this job. the contract states, including all applicable sales tax.
thanks RAY.... er i mean rAY....uh..rAy uhhhh...raY
duhhhhhh... mark
hey that's the reason i come to this bullboard.
[ September 29, 2001: Message edited by: Mark Fair Signs ]
posted
In Arizona, taxes on signage would be collected on the end product, materials and labor required to fabricate included.
Labor for installing the signage is NOT taxable.
Labor in any service (with the exception of fabricating an item) is not taxable.
In my area, the state, city and county taxes are calculated and collected on one form and handled by one office, then once the DOR gets the form and payment their staff splits the taxes apart for the state, city and county. Makes things easier.
I sell mostly out of state and those sales do not get taxed at all so 98% of the time I dont even have to worry about sales taxes.
-------------------- "If I share all my wisdom I won't have any left for myself."
Mike Pipes stickerpimp.com Lake Havasu, AZ mike@stickerpimp.com
Posts: 8746 | From: Lake Havasu, AZ USA | Registered: Jun 2000
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posted
It can be worse. In California, if you do not collect the correct amount of tax, if you get audited, you have to pay the tax whether you collected it or not. If you overcollect tax, you have to give that to the state too. That's what you call business friendly. Vic G
-------------------- Victor Georgiou Danville, CA , USA Posts: 1746 | From: Danville, CA , USA | Registered: Dec 1998
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posted
In Michigan you must tax all signs as a product sold to an end user. If I make a custom 4x8 sign I cannot separate labor from materials; the completed sign is a product, and the total cost is taxable. Even vehicle lettering must be taxed the same way. Labor cannot be separate. Now, if I manufacture a sign (taxed) and install it, the labor billed on the install is not taxable. If your not sure about your sales tax obligations, call your state sales tax office. I did, and they faxed me the information. It comes in handy every so often when there is a tax dispute with a customer. Make sure you're collecting sales tax accurately. A local hardware store was audited recently, and had to pay thousands in back taxes. Their problem was that they were not taxing items to contractors that were not intended for resale (tools, mostly). Items sold to businesses and contractors (building materials) that are to be used in manufacturing an end product or sold directly to end users are not taxable by the hardware store, but the tax is eventually paid by the end user.
-------------------- Tim Whitcher Adrian, MI Posts: 1546 | From: Adrian, MI | Registered: Mar 1999
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posted
In Mass like Rob said we have to tax on the whole job except maybe an installation charge. I had a customer recently that was a large truck repair place, they insisted I break down the parts and labor on the sign, because that is how they do it.
I told them that the sign is an end product much like a TV, and if they wanted to call the tax office and provide proof, I would gladly oblige. they paid the bill.
-------------------- Bob Rochon Creative Signworks Millbury, MA 508-865-7330
"Life is Like an Echo, what you put out, comes back to you."
Posts: 5149 | From: Millbury, Mass. U.S. | Registered: Nov 1998
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Isn't it funny how some people say that they don't have to pay the tax on a sign because it is a capital improvement? LOL!
In New York, capital improvements to real property (buildings) are tax exempt. Unfortunately 99% of signs are not considered capital improvements for a myriad of reasons.
We tell the clients that they are responsible for the tax unless they supply written proof that the sign is indeed a capital improvement. They always pay the tax because they can not prove it.
Hey, why should any of us be on the hook for the tax due? You did right sticking to your invoice with the tax. Way to go!
Have a great one!
-------------------- Bruce Bowers
DrCAS Custom Lettering and Design Saint Cloud, Minnesota
"Things work out best for the people who make the best of the way things work out." - Art Linkletter
Posts: 6451 | From: Saint Cloud, Minnesota | Registered: Jun 1999
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posted
GDAY In australia we had sales tax on signs that nobody (ME excepted) seemed to pay. Now we have GST on nearlly everything, so 10% goes on the whole sign : remit the amount to the government Quarterly
Our GST was stuffed by the "Chardonnay socialists" insisting on leaving the tax off cooked chickens, but on uncooked chickens etc etc
Kevin Smith Signs Mudgee NSW Australia
-------------------- Kevin Smith Kevin Smith Signs Mudgee, NSW
Posts: 13 | From: Mudgee NSW Australia | Registered: Aug 2000
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posted
In California if the job is attached to a piece of property in a permanent fashion that is not clearly enough defined, then it actually appreciates the value of the property and the property tax covers it. The assecors office will add it to the tax base.
If it's a sign that gets carried out or mounted on a wall or on some wooden posts, it's totally taxable.
Repaints done on site are not taxable, but if that same sign came in for the maintenance it is taxed.
Lettering on vehicles and boats is non taxable, unless it's a magnetic or a sign that gets installed on a vehicle.
Remember those flyboys that used to make letters in the sky? I wonder if skywriting is taxed? What if the skywriting is half across the Arizona border?
[ October 01, 2001: Message edited by: Rick Sacks ]
-------------------- The SignShop Mendocino, California
Making the simple complicated is commonplace; making the complicated simple, awesomely simple, that's creativity. — Charles Mingus Posts: 6724 | From: Mendocino, CA. USA | Registered: Nov 1998
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posted
well mr. chapman, you were wrong. i just got off the phone with the sales tax people and they said that if i broke down on the invoice materials, fabrication labor and installation labor then i should only charge sales tax on materials.
maybe we are not as slow here in alabama as you thought. do i need to draw you a picture??? listen carefully.... I-t-'-s t-h-e l-a-w.(at least here in alabama it is)
posted
My old age must be getting to me. In your post you asked about sales tax "in your area". I replied about what the law is in Texas. If that's not how you do it in Alabama, how does that make me wrong?
Must be something other than peanut butter in that sandwich.
[ October 01, 2001: Message edited by: Raymond Chapman ]
-------------------- Chapman Sign Studio Temple, Texas chapmanstudio@sbcglobal.net Posts: 6306 | From: Temple, Texas, USA | Registered: Nov 1998
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posted
A word of warning from someone who has been through a sales tax audit -- "Don't believe everything the sales tax people tell you over the phone!" I was given some wrong information by the Dept. of Revenue and had to pay dearly for it. My advice - get it in writing!
-------------------- Jean Shimp Shimp Sign & Design Co. Jacksonville Beach, Fl Posts: 1267 | From: Jacksonville Beach, Fl. USA | Registered: Nov 1998
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Although this is not an answer to your original question, I believe it does bear some relativity on the subject and would like to offer the following.
If you’re interested in what your fellow states are charging (and calling it for that matter) head on over to town-usa.com state sales tax list. It may be of everyone’s interest in the near future depending on proposed legislation, as you may need to collect and submit tax on all out of state sales. It was reported in the October 15 issue of Bottom Line Personal that many stores are already reporting purchases made out of state to your home state. And some of these states require you to report and pay use tax.
Guess what happens when your list doesn’t match their list!!
Ring, Ring.
“Hello”
“Yes, this is (insert not so friendly sounding name here) from (insert your state here) Department of Revenue calling….”
If you don’t like the sound of this, contact your Federal and State Representatives and voice your opinion. You may also want to get involved with representative organizations that would fight such legislation. (If you are opposed to it.) (And if your not, don’t worry, as most people like to complain after the fact but not take action before the dead is done, it stands a fair chance of becoming reality in the not to distant future.)
[ October 03, 2001: Message edited by: Bob Gilliland ]
-------------------- Bob Gilliland InKnowVative Communications Harrisburg PA, USA
"The U.S. Constitution doesn't guarantee happiness, only the pursuit of it. You have to catch up with it yourself." Benjamin Franklin Posts: 642 | From: Harrisburg, PA, USA | Registered: Nov 1998
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