Lawn care is an essential service that many homeowners require. Most of the time, business owners running lawn care companies for the first time may ask: Do I have to charge sales tax on lawn care?
This article will explore the different rules and regulations surrounding the sales tax on this service. Let’s scroll down to get in-depth explanations!
Table of Contents
What Is Sales Tax?
Sales taxes are a type of levy levied on the purchase of products and services. It is levied by government agencies and is paid for by the buyers.
This tax generates government revenue and funds public services such as schools, roads, and healthcare. Each state has its rates for this type of tax.
In the United States, sales tax is not federal but imposed by individual states. Therefore, the sales tax rate can significantly differ based on your location.
Additionally, this tax is often a proportion of the final sale price of the services or products provided.
It’s crucial to understand how this tax varies from other taxes like income tax and property tax.
Do I Have To Charge Sales Tax On Lawn Care?
It depends. Whether or not your business has to pay sales tax depends on factors like your regional laws, company service type, and business structure.
Therefore, it’s challenging to answer this question directly! Here are the comprehensive explanations that may be helpful for your business.
State Laws
Before you establish your business, you must consider many things. One of the most important is the state laws governing your business operations.
You must research the regulations in your region to ensure your firm won’t get into any legal trouble.
Each state has laws regarding sales tax on these services. Some require companies to charge tax on all services, while others only demand tax on specific services.
This tax is compulsory for all lawn care services in Texas. On the other hand, it is only mandatory for landscaping and pest control services in Florida.
Therefore, it’s best to check your area’s Department of Revenue website to understand its specific regulations.
State laws
Type of Service
The type of service provided is an essential factor that affects the sales tax on these services.
In most states, this tax is only compulsory on services that involve planting or installing new items like trees or shrubs.
Routine services like mowing, trimming, and edging are generally exempt from this tax.
However, some states have different rules. For instance, some regions require sales tax on all lawn care services regardless of the type of service provided.
Meanwhile, other states only require this tax on specific services, such as fertilization or pest control.
For this reason, understanding what services are taxable and exempt in your area is crucial to avoid confusion or penalties.
It’s advisable to consult a professional, check with your state’s tax authority, or review its sales tax laws and regulations.
After that, you can know and ensure your business complies with the regional regulations and avoid unwanted fees or fines.
Type of service
Business Structure
Your company’s business structure may determine whether you must charge this tax on your services.
Moreover, it depends on the state’s legislation and the business structure you adopt.
Are you running your business as a partnership? You may not have to charge this tax on your services.
However, if you run your business as a company, adding this tax to all services you provide is mandatory.
Therefore, it’s better to consult an attorney or expert to determine your firm’s most suitable business structure.
Business structure
Exemptions and Exceptions to Sales Tax on Lawn Care Services
As a business owner providing these services, it is essential to understand the exemptions and exceptions to sales tax in your region.
This tax can significantly impact your bottom line, and failing to comply with regional laws can result in costly penalties and fines.
Let’s look at the following exemptions and exceptions!
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Exemptions
#1. Resale Exemption
If you provide your company’s service to other firms and they will resell it afterward, you are eligible for this exemption.
It allows you to purchase gardening equipment and supplies without paying sales tax.
You can then charge sales tax to the enterprise you provide services to. And they will pay the tax when they sell your services to their customers.
#2. Nonprofit Exemption
You may get this exemption if your company offers services to a nonprofit organization.
As a result, you can buy gardening equipment without paying this tax. After that, you only need to charge it to the organization you provide your services to.
This organization will pay the tax when they collect donations or charge for events.
Exceptions
#1. Labor-Only Exception
Do you provide services that involve only labor and no tangible personal property? You may get a labor-only exception.
As a result, you can charge for your services without collecting sales tax.
#2. Bundled Services Exception
Are you offering your services as a part of a bundle that includes other services, such as snow removal? If yes, you are eligible for a bundled services exception.
This exception allows you to charge for the entire bundle without collecting sales tax on the lawn care portion of the bundle.
Exemptions & exceptions
Final Thoughts
Whether you charge sales tax on lawn care services depends on factors, including your regional laws, your company’s business type, and its structure.
It would be best to research the laws in your region to avoid unwanted fines or penalties.
As a business owner, you should focus on providing excellent customer service; worrying about this tax can be overwhelming.
With the proper knowledge and guidance from MowerLiving, you can navigate the tax requirements and run your business successfully.
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