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Asked 3/7/2008

If you have a service business do you have to pay state sales tax on work you do for other companies that issue you a 1099 at the end of the year?

I have a window cleaning/carpet cleaning company, and I have not charged these companies sales tax on my work. I do residential homes also, and charge them. What is the rule on this?

 
 
 
 
 
Answers

Answer 1/1 - Submitted 11/23/2008

You are providing a service, not selling items which require sales tax. When you work up your taxes (state and federal) you will have the 1099 income. You will also have expenses you deduct. You pay tax on the net profit. Note that part of your expenses will be sales tax you have paid for supplies. These sales taxes are usually included as part of the cost of supplies and not detailed further.

Somewhat more confusing. If you sell out of a store, such as a repair shop, you are supposed to charge sales tax to your customers which you send to the state. This is true even if you are providing a service.

 
 
 
 
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