Understanding Sales Tax on Swimming Pool Services
When it comes to taxes, it’s essential to stay informed about what is and is not taxable in your state. Many business owners may not realize that certain services such as swimming pool maintenance, are subject to sales tax. In Texas, the state comptroller has made it clear that swimming pool services fall under the category of taxable services. According to the publication from the Texas State Comptroller, businesses providing swimming pool services are required to collect and remit sales tax. Let’s delve into the details of this publication and understand the implications of this tax requirement.
Texas State Comptroller Publication
The publication from the Texas State Comptroller, outlines the taxability of swimming pool services. It specifies that services such as cleaning, maintaining, or servicing swimming pools are considered taxable. This means that if you own a business that provides these services, you are obligated to collect sales tax from your customers and remit that amount to the state. This is not income as someone on Facebook recently commented. This is a liability, and you are doing the work for the state to collect it and pay it.
The publication further explains that the tax applies to both residential and commercial swimming pool services. This includes a wide arrange of activities such as adding chemicals, cleaning, and vacuuming, repairing equipment, and any other maintenance work related to swimming pools. It’s important for businesses offering these services to understand the nuances of the tax law to ensure compliance and avoid potential penalties &/or back taxes.
Failing to comply with the sales tax requirements for swimming pool services can lead to legal and financial consequences. Businesses that neglect to collect and remit sales tax as mandated by the state may face penalties, interest, back taxes, and even legal action. Therefore, it’s vital for businesses to stay updated on tax regulations and fulfill their tax obligations.
The publication from the Texas State Comptroller serves as a reminder that swimming pool services are subject to sales tax in the state of Texas. Whether you’re a business owner providing these services or a consumer utilizing them, It’s essential to be aware of the tax implications. By understanding and adhering to the tax laws, businesses can avoid potential issues and contribute to the proper functioning of the state’s tax system.
How to Register your business to collect and remit sales tax
Registering to collect sales tax is an essential step for businesses that sell taxable goods or services. The process of registering for sales tax collection varies by state, but generally follows a few common steps. Here’s a general overview of how a business can register to collect sales tax.
- I recommend working with a bookkeeper or accountant. They will take this off your plate and complete the task quickly and easily. I also recommend hiring a bookkeeper or accountant to handle submitting your sales tax payments. I currently pay my accountant $270/mo. She handles my monthly payroll, federal tax payments, sales tax payments, and reconciling accounts. My accountant also handles year-end tax prep and filing.
- Obtain a Taxpayer Identification Number (EIN) from the Internal Revenue Service (IRS). Sole Proprietors can use their Social Security Number as their TIN. If you are unsure how you will need to structure your pool business, I recommend reading this blog post, “Business Formation – Choose the Right Entity for Your Weekly Pool Care Business“
- Contact your states Sales Tax Authority. This is typically your states department of revenue, comptroller, or taxation department. You can usually find the necessary forms and information on the department’s website.
- Complete the registration application. Fill out the appropriate registration forms provided by the state tax authority. The forms will typically require information about your business, TIN/EIN, industry classification, and estimated sales tax liability. Some states may also require information about business owners or partners.
- Submit the Application. After completing the registration form, submit it to your states tax authority as instructed. This is often done online, but some states may accept paper applications. Be sure to double check that all required information is accurate.
- Await Confirmation. Once your application is submitted, your state tax authority will process it. After approval, they will issue you a state tax permit or license. This document authorizes your business to collect sales tax from your customers and remit the tax to the state.
- Comply with ongoing Requirements. After receiving your sales tax permit, you will be responsible for collecting the appropriate amount of sales tax on taxable transactions and remitting it to the state on a regular basis, usually monthly, quarterly, or annually. Additionally, you will need to file sales tax returns and maintain accurate records of your sales tax activities.
- Maintaining Accurate Records: How will you know the amount of sales tax you’ve collected if you do not have accounting software to track it? This is where having QuickBooks Online makes all the difference in the world.
- Sign up for QuickBooks, give your accountant, bookkeeper, or both access and get your chart of accounts set up properly so you’ll be able to track your sales tax to the penny.
- Never Stop Learning: I recommend reading my other articles about the importance of having accounting software and what makes having a chart of accounts so important.
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It is important to note the process for registering to collect sales tax may vary by state, and some states may have additional requirements or specific procedures. Therefore, it is advisable to consult with your states tax authority to ensure that you understand and fulfill all necessary obligations in your specific location.
Are you Charging Sales Tax?
I can only speak to the taxable services in the state of Texas. That is where I currently service swimming pools. Google your state comptroller and search for swimming pool services. Start researching the taxability of swimming pool services in your state today. You do not want to be part of an audit or be forced to pay back taxes or penalties. Even if your state does not require sales tax for swimming pool services it surely will charge sales tax on product or equipment sales. Getting registered will set you up for selling parts, chemicals or equipment to your customers.
Comment below and subscribe to my blog. I look forward to hearing how you are handling sales tax in your state.
What if you have not charged sales tax in the past and now you want or need to be in compliance… I have a sample letter you can send to your customers explaining why the change in price. Subscribe to my blog and comment below. I will send you a copy of the letter.