# Texas, taxes, and bidding...



## TSG_TX (Apr 9, 2017)

I am currently bidding as a subcontractor on commercial work, but occasionally have calls for residential jobs.

My question is... During the bidding process, how do you calculate and factor in your Sales & Use Taxes to your bid? I am in Texas.

I commonly bid in lump-sum, and use bid-items (concrete paving, concrete sidewalk, concrete curb & gutter, etc.) with their respective bid price (Cost+OHP), but no indication of quantity of units. 
My understanding of the Texas Sales & Use Tax was that in a lump-sum contract, taxes are applied to the entire amounts billed, due to no separation of material prices. 

Is that correct, or am I interpreting this wrong? Should I include my material taxes in the unit pricing, or at the end of the bid when calculating OHP?


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## TimberlineMD (Jan 15, 2008)

I just did a 'quick' look at the Texas sales tax laws and it seem that 'some' commercial work is taxed at full cash value. Which includes everything. You can't itemize your billing, so the contract price before adding sales tax would be the number to use for calculating the tax. 

"All charges for labor
and materials to rebuild,
replace, alter, modify
or upgrade existing
nonresidential
realty are taxable."

It does exclude..

"The repair, restoration or remodeling of
nonresidential real property does not include
the addition of new usable square footage or
scheduled and periodic maintenance.
See Comptroller Rule 3.357, Nonresidential Real
Property Repair, Remodeling, and Restoration; Real
Property Maintenance and Publication 94-116, Real
Property Repair and Remodeling"

It does not have any provisions for residental work.

I do not work in Texas, so this is a laymans understanding.


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## TxElectrician (May 21, 2008)

On residential projects I pay sales tax to the supplier when I purchase material, there is no sales tax on labor.

Commercial projects, if I am a sub, I get a resell certificate from the GC, and they are responsible for collecting and paying the state, and I purchase my material tax exempt.

On commercial projects that I am the prime contractor, sales tax is added to the final contract price, labor, material, oh, and profit, and I am responsible for sending it in to the state.

Get a good accountant, and stay up on your payments. 

I assume you have a tax number from the state? If not, get one. The frequency of your tax payments will be determined by your taxable sales.


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## TSG_TX (Apr 9, 2017)

Yes, I do have my tax number. Currently set at quarterly filing. Have any GC's given a hassle about resale certs? I've usually included it in my bid, and taxed again as a grand total. Maybe I've been doing it in error and the reason I haven't been able to win anything. 

In what order do I add the totals?

+Materials (excl. Tax)
+Labor/Eqp.
+OH
+Profit
=Contract Price

Do I put tax anywhere? What about rental equipment?


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## TxElectrician (May 21, 2008)

TSG_TX said:


> Yes, I do have my tax number. Currently set at quarterly filing. Have any GC's given a hassle about resale certs? I've usually included it in my bid, and taxed again as a grand total. Maybe I've been doing it in error and the reason I haven't been able to win anything.
> 
> In what order do I add the totals?
> 
> ...


You are going to pay yax on your rentals unless you furnish them with a resale cert, just like materials.

I ask the gc if they are furnishing a cert or want me to include tax. 
As far as giving them a price, they get a lump sum price


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## TSG_TX (Apr 9, 2017)

TxElectrician said:


> You are going to pay yax on your rentals unless you furnish them with a resale cert, just like materials.
> 
> I ask the gc if they are furnishing a cert or want me to include tax.
> As far as giving them a price, they get a lump sum price


Well, I'm usually asked to break out the bid items (sidewalk, paving, foundation, etc). In that case, would I break down my OH/P into each individual bid item?


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## TSG_TX (Apr 9, 2017)

Sorry for the multiple messages. I was bbq'ING at the same time.. but an example of what I ask below,

Sidewalk
+mat'l (no tax)
+labor/eqp.
+OH
+Profit ((cost+oh)xP%)
= Bid Price


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## TxElectrician (May 21, 2008)

We are in different businesses, but I don't break down like that. If required, I would break down
Sidewalk. $***x.xx
Paving. $××××.××
Foundation $***x.xx
Total. $***x.xx


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## TxElectrician (May 21, 2008)

One other thing. New build commercial, not required to charge tax on labor. Remodel, addition or service you are


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## AustinDB (Sep 11, 2006)

TxElectrician said:


> One other thing. New build commercial, not required to charge tax on labor. Remodel, addition or service you are


is that backwards?


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## TxElectrician (May 21, 2008)

72chevy4x4 said:


> is that backwards?


No, thats the way.


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## TSG_TX (Apr 9, 2017)

TxElectrician said:


> We are in different businesses, but I don't break down like that. If required, I would break down
> Sidewalk. $***x.xx
> Paving. $××××.××
> Foundation $***x.xx
> Total. $***x.xx


Oh noooo.. I don't ever breakdown material and labor. I break down exactly how you laid it out here. I was just asking the process in getting my item bid price. 
Normally Ill add all my cost, then calculate my overhead (based on workable hours), calculate my profit (on cost and overhead), then tax the entire thing. Am I taxing inappropriately? 



72chevy4x4 said:


> is that backwards?


I was thinking the same thing. Residential not taxed and commercial taxed.


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## TxElectrician (May 21, 2008)

TxElectrician said:


> One other thing. New build commercial, not required to charge tax on labor. Remodel, addition or service you are


To be clear, this entire post is in regard to commercial projects.


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## TSG_TX (Apr 9, 2017)

TxElectrician said:


> To be clear, this entire post is in regard to commercial projects.


Correct.


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## TxElectrician (May 21, 2008)

TSG_TX said:


> Oh noooo.. I don't ever breakdown material and labor. I break down exactly how you laid it out here. I was just asking the process in getting my item bid price.
> Normally Ill add all my cost, then calculate my overhead (based on workable hours), calculate my profit (on cost and overhead), then tax the entire thing. Am I taxing inappropriately?
> 
> 
> I was thinking the same thing. Residential not taxed and commercial taxed.


This is the correct way.


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## TSG_TX (Apr 9, 2017)

TxElectrician said:


> This is the correct way.


So, taxing the entire contract price is correct? The reason I started second guessing myself is 
1) I realized I haven't been winning any commercial work lately, 
2) I read an article by a CPA where they "clarified" the taxing of services, etc for contractors. This made me think about my process in how I bid, and wondering if I've been shooting my price up by inappropriately taxing.


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## TSG_TX (Apr 9, 2017)

TxElectrician said:


> One other thing. New build commercial, not required to charge tax on labor. Remodel, addition or service you are





72chevy4x4 said:


> is that backwards?





TxElectrician said:


> No, thats the way.


Okay, okay.. I see what you are getting at. Lets keep this strictly commercial then. I just went back over it and you are correct, which you already know. Just for my clarification.


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## TSG_TX (Apr 9, 2017)

I've spent the last 30 minutes going over the tax publications, and have found my answer. I still pay tax on materials (unless Resale Cert), and should be included in my material price.. but not charged to the customers, under a Lump-Sum contract, unless it repair/remodel. 

LUMP-SUM CONTRACTS:
Repair/Remodel
------------------
Residential = No tax charged to customer
Non-Residential (Commercial) = Taxable and charged to customer

New Construction
-------------------
All Properties = No tax charged to customer



Maybe that made it sound more complicated than it is. Either way, I've got it. Thanks all.


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## TSG_TX (Apr 9, 2017)

TimberlineMD said:


> I just did a 'quick' look at the Texas sales tax laws and it seem that 'some' commercial work is taxed at full cash value. Which includes everything. You can't itemize your billing, so the contract price before adding sales tax would be the number to use for calculating the tax.
> 
> "All charges for labor
> and materials to rebuild,
> ...


I apologize for not responding to your post, I must have missed it. Thanks for the response.


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## TSG_TX (Apr 9, 2017)

Old post, but I am looking to get a specific clarification...

If the commercial project I am bidding is considered a remodel, and I am bidding on removing and replacing concrete in the parking lot... is that taxed? I will be bidding lump-sum on individual items of the concrete scope.


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