I'm just starting a business. I plan on using flat rate pricing for residential and t&m for refrigeration(restaurants) I guess I'll pay sales tax up front on everything I purchase from the suppliers and then just collect sales tax again on the t&m invoices. Does this sound correct? I'd like to bill out everything flate rate and not have to submitt sales tax every month but don't think that's going to be possible in the restaurant business.
Our flat rate system calculates tax for us so it makes it easy to report what we collected. We do flat rate repairs, T&M cleans and installs. Computer spits out the figure, we send in a check. Not sure how often, could be monthly.
If you pay tax on what you buy then resell it and collect tax again as an install or T&M repair, that's getting pricey. The state will appreciate it but might put you above some competitors.
Don,t pay it twice!!
In this state, PA, you can take a credit for sales tax already paid on items resold.
I'd check out the tax laws in your state carefully. Sometimes they're really complex, depending on the type of equipment you're selling/servicing.
In some states residential hvac sales/service isn't taxable. The contractor is considered the end user and pays the tax on materials when he buys them. So he doesn't collect sales tax.
This is because these states classify permanently installed equipment to be "fixed, real property", and repairs or installation of it aren't taxed to your customer.
Some household appliances are considered tangible personal property which is taxable, like a household refrigerator, because it isn't permanently installed.
This can really be a pain if you do business in more than one state or work on many kinds of equipment. I've been in a position where a part or material could be used on something taxable or non-taxable. So do I pay tax on it when I buy it or not?
The state insurance commissioner once told me "You have to wear two hats."
I was paying a CPA $2,000 a year to deal with that mess until I finally decided to throw away one of the hats and fire the CPA and only work on things that I didn't have to collect sales tax for
I'm *MORE THAN HAPPY* to pay sales tax on everything I buy now!