Invoicing advice for Texas contractors

[lesaew]

Hello I am a one man start up in Texas, In my state the comptroller recommends 2 types of invoicing for contractors. Time & Material and Lump sum. With lump sum I would not have to collect sales tax and report it to the state and seems like the easiest thing to do. But I don’t see how that would work with service calls. Do you guys exclusively use one form of invoicing over the other or do you use both depending on the situation?

 

[mtnelect]

I use online QuickBooks Pro exclusively with add on Intuit Payment Solutions. I have created my own "Flat Rate" and "Product" book. When inflation creeps up, I go in and raise prices across the board as needed.

QuickBooks Pro costs $30.00 and Intuit Payment Solutions cost $19.95 monthly.

 

[zbang]

Get those set up by an accountant or QB consultant, then it'll be almost a breeze to "do the books".

 

[lesaew]

I use online QuickBooks Pro exclusively with add on Intuit Payment Solutions. I have created my own "Flat Rate" and "Product" book. When inflation creeps up, I go in and raise prices across the board as needed.

QuickBooks Pro costs $30.00 and Intuit Payment Solutions cost $19.95 monthly.

Is flat rate a form of lump sum?

 

[mtnelect]

Is flat rate a form of lump sum?

Yes ... Each "Flat Rate" item includes total cost for a specific job function. Like " Dedicated Circuit 20 amp - NM 100 feet" or "Dedicated Circuit 20 amp - MC 200 feet". You build your invoice with these "Flat Rate" items. Flat rate amounts are calculated from historical completion times & material cost.

All designed to give you a healthy profit margin !

 

[cdslotz]

Is flat rate a form of lump sum?

Yes...includes everything you can charge including labor that you will never use....lol

 

[fishin' electrician]

So you make up an invoice at T & M and it comes to 1000. Add 6% (for arguments sake) tax so the bill is 1060. But you can magically not pay that tax if you just send the invoice as a lump sum of 1060 due?

 

[James L]

So you make up an invoice at T & M and it comes to 1000. Add 6% (for arguments sake) tax so the bill is 1060. But you can magically not pay that tax if you just send the invoice as a lump sum of 1060 due?

No, but you could write all those numbers on scratch paper, then make the invoice with only the lump sum.

 

[fishin' electrician]

No, but you could write all those numbers on scratch paper, then make the invoice with only the lump sum.

I was using a scratch pad.

Seams an awfully easy way to not pay tax.

Why would anyone pay?

 

[zbang]

AFAICT, one way the customer pays sales tax, but that's not income to the contractor and they only pay income tax on a smaller amount; the other way, the income (and it's tax) is higher.

 

[mtnelect]

In California ... Since I do service calls in addition to contracts, I have a State Sales Tax Certificate with the State of California. I file my state sales taxes quarterly.
When I go to my wholesale house to pick up material for service calls, I don't pay sales tax. The State of California likes it this way because the tax is based on the retail amount not the wholesale amount.
When I go to the wholesale house to pick up material for a contract then I pay the tax based on the wholesale price.

 

[mtnelect]

A play on words: "Texas = Taxes"

 

[texie]

In California ... Since I do service calls in addition to contracts, I have a State Sales Tax Certificate with the State of California. I file my state sales taxes quarterly.
When I go to my wholesale house to pick up material for service calls, I don't pay sales tax. The State of California likes it this way because the tax is based on the retail amount not the wholesale amount.
When I go to the wholesale house to pick up material for a contract then I pay the tax based on the wholesale price.

I agree. This is the way most states work. Lump sum/contract work is considered real property and material is taxed at the contractor purchase level VS itemized service work is personal property and taxed a final retail sale. The hassle is that you need 2 accounts with your suppliers and of course the extra work tracking this.