Landscapers are considered contractors for sales tax purposes. Whether or not a landscaper collects sales tax from a customer depends on whether the work being done is a capital improvement of real estate or is repair, maintenance or installation work. Landscaping services that are subject to sales tax are maintenance, service and repair of real estate. The installation of tangible personal property that does not qualify as a capital improvement is also taxable.
Some examples of garden repair and maintenance services are mowing lawns, repairing fences, trimming hedges, and removing snow, just to name a few. Purchasing Materials Companies that provide gardening services are considered contractors under the law. Therefore, the landscaper is responsible for paying sales or use tax on materials that are installed on the real estate. Collecting Customer Tax A contractor who provides gardening services for an end user must collect 6.625% sales tax on the gross sales receipt.
However, at the contractor's choice, the actual cost of the materials used and on which the contractor paid taxes may be indicated separately on the invoice. A separate statement of the actual cost of materials would not be subject to tax collection. Whenever a contractor performs a taxable service, if the customer is billed a lump sum, the entire receipt is taxable. If the contractor separately states the actual cost of the materials of the taxable labor, the customer will only be charged tax on the part of the labor.
For more information, see publication ANJ-4, Landscapers %26 New Jersey Sales Tax. As a lawn care provider, the burden of ensuring compliance with all fiscal rules and regulations falls solely on your shoulders. While most states do not require sales tax for services, New Mexico, Hawaii, and South Dakota tax nearly all services, including landscaping, lawn care, and pest control. You need to analyze some data to determine the best way to manage your tax liabilities as a lawn care provider.
It's true that part of laying the foundation for your lawn care company is figuring out what taxes you should collect. Alternatively, lawn care providers can use applications such as Gusto to automate tax collection in accordance with their state's regulations. All lawn care professionals, including sole proprietors and limited liability corporations that collect sales taxes, are required to file sales tax returns with their state's tax authority.