# Providing receipts and project costs to customer



## [email protected] (Nov 17, 2014)

To collect sales tax from the customer you need license as a reseller. I would stay away from that if you can. Here in Washington we have to charge tax on labor. It's just a pain in the a$$. I would be Leary of this customer. Sounds like a property lien waiting to happen.


----------



## overanalyze (Dec 28, 2010)

480sparky said:


> I think it's fairly obvious.
> 
> *Are you authorized by your state to collect sales tax?*
> 
> It's that simple. If the customer is writing you a check, even in part for sales tax, you are collecting sales tax. If you are not authorized by the state for doing so, I'm sure a zealous state's attorney could come after you.


OK...one more time...I don't have to be authorized. I do not charge sales tax. I don't collect sales tax. This is directly from the State of Ohio Tax portal....

"Contractors and home remodelers do not collect sales tax on their work. They do however, pay sales tax on the supplies they purchase. Available on the Ohio Department of Taxation’s website is the form STEC CC, which is the construction contract exemption certificate. This certificate is to be presented to a vendor when making purchases that qualify as exempt. Some contractors find it’s easier to use a direct pay permit when buying taxable supplies. The direct pay permit allows them to buy the items without paying the tax at the time of purchase. All of that tax is gathered together and paid on a monthly basis. Direct pay permits are issued by a mutual written agreement between the applicant and the Ohio Department of Taxation.

Building and construction materials sold to a construction contractor for incorporation into real property outside this state are not subject to Ohio sales or use tax if the materials would be exempt from tax when sold to the contractor in the other state. The contractor’s exemption does not apply to tools, equipment, rentals of personal property, form lumber, temporary items such as fencing, lighting, etc., and any other purchases of tangible personal property or taxable services, not incorporated into real property."

Good now??:blink:


----------



## BamBamm5144 (Jul 12, 2008)

We are the same way overanalyze. We don't need to collect sales tax for the type of home improvement we do but I know some other trades have to.


----------



## 480sparky (Feb 1, 2009)

overanalyze said:


> OK...one more time...I don't have to be authorized. I do not charge sales tax. I don't collect sales tax. This is directly from the State of Ohio Tax portal....
> 
> "Contractors and home remodelers do not collect sales tax on their work. They do however, pay sales tax on the supplies they purchase. Available on the Ohio Department of Taxation’s website is the form STEC CC, which is the construction contract exemption certificate. This certificate is to be presented to a vendor when making purchases that qualify as exempt. Some contractors find it’s easier to use a direct pay permit when buying taxable supplies. The direct pay permit allows them to buy the items without paying the tax at the time of purchase. All of that tax is gathered together and paid on a monthly basis. Direct pay permits are issued by a mutual written agreement between the applicant and the Ohio Department of Taxation.
> 
> ...


OK, once again.

Where does that quote give YOU...... *YOU*..... _*YOU*._.. authorization to collect sales tax?

YOU collected money from your customer, didn't you? Your client didn't write a check to your suppliers for the sales tax paid, did they?  They paid YOU, didn't they?


Again...... where are YOU authorized to collect sales tax?

Can you quote something from your state that does?


I'm not trying to be difficult. It's just 'round here, to collect sales tax, you are required to have a permit. Something you repeatedly say you don't have. Yet, as I see it, you are collecting sales tax, if in no other capacity than to pass it on to your suppliers.

Is there something in your state laws that allows you to collect said sales tax in this manner?


----------



## TNTRenovate (Aug 19, 2010)

As long as I pay sales tax on the material I purchase I do not have to charge my client sales tax. 

When they pay me they are not paying a sales taxes but reimbursement.


----------



## overanalyze (Dec 28, 2010)

480sparky said:


> OK, once again.
> 
> Where does that quote give YOU...... *YOU*..... _*YOU*._.. authorization to collect sales tax?
> 
> ...


I don't know what more I can give you 480. Here is the link. It has all the info I have been copying & pasting.

http://www.tax.ohio.gov/taxeducation/construction_contract.aspx

I don't collect sales tax. I pay it on materials used for the improvement of real property at the time I purchase it. I don't need a permit to do that. 

If I was selling "tangible personal property" that did not become permanent to the real property, then I would need a vendor license, I would purchase my materials tax exempt, then I would tax said items on the invoice and then pay the collected tax to the state. 

Examples of "tangible personal property" are on Ohio's site. 

I am sorry if this is not how you think it should be...yet another example of different states having different rules....


----------



## phrs_50 (Dec 1, 2014)

Thanks again for everyone's replies.

I've never collected sales tax from a customer, just purchased my material from a vendor and paid taxes on it then.

As pcplumber mentioned, if I can help the customer save some money on whatever deduction I'm all for it, if that was indeed the case. Happy customers give referrals, and referrals keep food on my dinner table. 

The main concern for me with proving a breakdown is that no matter how honest I am with pricing, it still gives an opportunity for the homeowner to pick though and dispute costs. Happy customers can still get a little over zealous with being thrifty, even at a contractors expense.


----------



## 480sparky (Feb 1, 2009)

overanalyze said:


> ......I don't collect sales tax...........



If you are telling a customer "$NNN of the bill I gave you is for sales tax", is that not saying you're collecting sales tax?

You may not handing them an invoice that says, "Total $950, sales tax $50, Amount Due $1000". But saying, "Total due $1000, $50 of which is sales tax" is the same.


----------



## EricBrancard (Jun 8, 2012)

480sparky said:


> If you are telling a customer "$NNN of the bill I gave you is for sales tax", is that not saying you're collecting sales tax?
> 
> You may not handing them an invoice that says, "Total $950, sales tax $50, Amount Due $1000". But saying, "Total due $1000, $50 of which is sales tax" is the same.


Lets say a job cost $100 for materials plus $6 sales tax on those materials and $500 in labor. Are you saying that he would only be able to charge the customer for $600 instead of $606 and he would have to eat the sales tax instead of being reimbursed for it?


----------



## overanalyze (Dec 28, 2010)

480sparky said:


> If you are telling a customer "$NNN of the bill I gave you is for sales tax", is that not saying you're collecting sales tax?
> 
> You may not handing them an invoice that says, "Total $950, sales tax $50, Amount Due $1000". But saying, "Total due $1000, $50 of which is sales tax" is the same.


I get your logic..I really do...but that is not how the state of Ohio views it an so neither do I. I can't explain it any differently than I have. We will have to agree to disgree on this 480.


----------



## TNTRenovate (Aug 19, 2010)

480sparky said:


> If you are telling a customer "$NNN of the bill I gave you is for sales tax", is that not saying you're collecting sales tax?
> 
> You may not handing them an invoice that says, "Total $950, sales tax $50, Amount Due $1000". But saying, "Total due $1000, $50 of which is sales tax" is the same.


You can only collect something that is in debt. Since the contractor is the consumer and the material used is being installed in realty the sale tax burden has been satisfied.


----------



## Jaws (Dec 20, 2010)

overanalyze said:


> I get your logic..I really do...but that is not how the state of Ohio views it an so neither do I. I can't explain it any differently than I have. We will have to agree to disgree on this 480.


Personally I put a lot more stock in what a veteran CPA in Texas says about taxes in Texas than a sparky in Iowa.....

Id feel the same way in Ohio.


----------



## overanalyze (Dec 28, 2010)

Jaws said:


> Personally I put a lot more stock in what a veteran CPA in Texas says about taxes in Texas than a sparky in Iowa.....
> 
> Id feel the same way in Ohio.


I agree 100% We have had a similar discussion with our CPA a few times on the matter to make sure we are good. I even said that earlier in the discussion. I felt 480 was doubting my input so I went to the source to show facts.


----------



## 480sparky (Feb 1, 2009)

overanalyze said:


> I agree 100% We have had a similar discussion with our CPA a few times on the matter to make sure we are good. I even said that earlier in the discussion. I felt 480 was doubting my input so I went to the source to show facts.


I'm not doubting the input. I'm just questioning how the 'system' works there. It just seems odd that a customer pays you for what you paid the sales tax, and the customer gets to deduct one of your expenses from their income taxes.


----------



## overanalyze (Dec 28, 2010)

480sparky said:


> I'm not doubting the input. I'm just questioning how the 'system' works there. It just seems odd that a customer pays you for what you paid the sales tax, and the customer gets to deduct one of your expenses from their income taxes.


It's not a deduction. If in the tax year they can show they paid more in sales tax than in income tax, they can use the sales tax amount on their tax return as the amount paid in. It's an either/or system...not both.


----------



## 480sparky (Feb 1, 2009)

overanalyze said:


> It's not a deduction. If in the tax year they can show they paid more in sales tax than in income tax, they can use the sales tax amount on their tax return as the amount paid in. It's an either/or system...not both.


It just seems to be an odd system to use one of _your_ expenses on _their_ tax returns.


----------



## overanalyze (Dec 28, 2010)

It is a bit odd..that we agree on. But according to my CPA it's a legit tax option in Ohio. What are you gonna do...I didn't write the law and I am not going to change it.


----------



## force8 (Aug 25, 2008)

Hey Sparky, phrs_50's question isn't about sales tax, nor is this thread... At least it wasn't originally.

The question is whether or not his customer is setting him up to get screwed down the road. Response.... most likely. 

Since the contract isn't cost + basis, it's none of his derned concern what your costs are.
If it's too late to RUN, be very careful... make sure client pays what's due with each progress payment. Don't let your work and costs get too far ahead of his payments. Protect yourself. Document everything. Keep complete records. Get change orders signed before you preform them, etc etc etc. 

After you end up liening this character, he'll probably demand a contractor's affidavit and etc... but that's then. Attorney's are expensive. Avoid that as much as possible by dotting your "t"s and crossing your "i"s and get paid as the job goes along


----------



## Calidecks (Nov 19, 2011)

It would be like me going into Micky D's and telling them I need to know the cost breakdown on the tomatoes, lettuce, and onions for my tax purposes, because this Lunch was for business. What do you suppose they would tell you?


----------



## Jaws (Dec 20, 2010)

Californiadecks said:


> It would be like me going into Micky D's and telling them I need to know the cost breakdown on the tomatoes, lettuce, and onions for my tax purposes, because this Lunch was for business. What do you suppose they would tell you?


Dont compare me to McDonald's  Im at least a Sizzlers or K Bobs steak house or an Outback or something :laughing:

Seriously, there is a big difference between a home and a crappy burger. Id be likely to try and accommodate them.


----------



## Calidecks (Nov 19, 2011)

Jaws said:


> Dont compare me to McDonald's  Im at least a Sizzlers or K Bobs steak house or an Outback or something :laughing:
> 
> Seriously, there is a big difference between a home and a crappy burger. Id be likely to try and accommodate them.


I'm not comparing the product, I'm comparing the tax request as far as breaking down proprietary expenses. It's the same concept whether it's McDonald's, Apple or MLW Construction.


----------



## hdavis (Feb 14, 2012)

Californiadecks said:


> It would be like me going into Micky D's and telling them I need to know the cost breakdown on the tomatoes, lettuce, and onions for my tax purposes, because this Lunch was for business. What do you suppose they would tell you?


Want fries with that:laughing:


----------



## pcplumber (Oct 12, 2008)

phrs_50 said:


> Thanks again for everyone's replies.
> 
> I've never collected sales tax from a customer, just purchased my material from a vendor and paid taxes on it then.
> 
> ...


I don't worry about the customers coming back at a later date to argue about the sales tax because I never gave a customer documentation in writing regarding the value of the materials. The customers have always called on the phone and requested the cost for the materials. I always told the customers over the phone to figure 40% to 60% for materials, whatever they want to tell their accountant and nothing was ever in writing. I never received a 2nd communication from a customer.

It is not a big deal to tell your customer how much the materials cost and it is not a secret. People are not so stupid that they can't find the costs for materials on the internet and I think it is stupid to refuse to tell the customer regardless of who they are or what type of job.

I install a 40-gallon heaters for $1250 - Is it really difficult to calculate how much I paid for the water heater and what my gross profit is.

I pour a a concrete driveway for $8,000 and my customer sees two loads of concrete poured. All she has to do is call the concrete company with their name written all over the truck and ask for the cost which is about $940 a load. Add $300 for lumber and rebar. It doesn't take a rocket scientist to figure out the cost for materials.

I build a patio for $10,00 with 200 2 x 6 x 8 pieces of redwood, a few bags of ready mix and some nails. No secret cost here!

If any of these customers call and ask how much the materials cost I will say, "Yes, I paid the sales tax for the materials, you paid me and the cost for the materials was 40% to 60%. I cannot give you an exact amount and you can use whatever number suits you best. These numbers are just an estimate and you were really pleasant to work for, I really enjoyed working for you and want to thank you for your business."

A high percent of your customers know the exact cost you pay for materials and they don't have to ask you because supply houses send your customers Preliminary Lien Notices with the cost of the materials printed on them.


----------



## pcplumber (Oct 12, 2008)

force8 said:


> Hey Sparky, phrs_50's question isn't about sales tax, nor is this thread... At least it wasn't originally.
> 
> The question is whether or not his customer is setting him up to get screwed down the road. Response.... most likely.
> 
> ...


You are 100% right and I would like to know how I got wrapped up in the sales tax debate.

It is possible that his customer was only guessing that he (or she) would have to give his accountant the labor and other costs and could care less, personally. Also, it is possible that a person who is not so bright could think that they must know the labor cost to determine the materials and sales tax costs. Regardless, most customers can still calculate and breakdown all the costs with little effort and I would not be afraid to throw out even wild numbers. I see no reason to try to hide them and I have no problem with letting people know that I earned a good profit.


----------



## Calidecks (Nov 19, 2011)

pcplumber said:


> You are 100% right and I would like to know how I got wrapped up in the sales tax debate.
> 
> It is possible that his customer was only guessing that he (or she) would have to give his accountant the labor and other costs and could care less, personally. Also, it is possible that a person who is not so bright could think that they must know the labor cost to determine the materials and sales tax costs. Regardless, most customers can still calculate and breakdown all the costs with little effort and I would not be afraid to throw out even wild numbers. I see no reason to try to hide them and I have no problem with letting people know that I earned a good profit.


My company costs are non of thier business, literally. The same reason any other business doesn't reveal there costs. It's absolutely proprietary. But each to thier own, that's just me.


----------



## Big Shoe (Jun 16, 2008)

:2guns: :2guns: :gun_bandana: :gun_bandana: :blink:


----------



## Jeremiah2911 (Jan 2, 2014)

I get asked for materials vs labor break down constantly and on less than $400 jobs too smh. Thats proprietary information. It takes 2 seconds to search what something costs which is why we will be moving away from free estimates too. Sorry but my husband won't be driving around in the cold and dark of this winter to give out estimates when 1) all that info is online 2) they aren't serious and are still "shopping and not buying" 3) gas may have went down but it's still not free. Sorry for the mini vent. 

In short...be prepared to return the deposit. This is a big a$$ red flag. 

With regards to sales tax, I'm curious as to what my fellow New Jerseryans are doing. We have to collect and remit sales tax quarterly not just on materials but on labor too. Threads like this make you reevaluate you entire process, doesn't it?


----------



## RangoWA (Jun 25, 2014)

Jeremiah2911 said:


> I get asked for materials vs labor break down constantly and on less than $400 jobs too smh. Thats proprietary information. It takes 2 seconds to search what something costs which is why we will be moving away from free estimates too. Sorry but my husband won't be driving around in the cold and dark of this winter to give out estimates when 1) all that info is online 2) they aren't serious and are still "shopping and not buying" 3) gas may have went down but it's still not free. Sorry for the mini vent.
> 
> In short...be prepared to return the deposit. This is a big a$$ red flag.
> 
> With regards to sales tax, I'm curious as to what my fellow New Jerseryans are doing. We have to collect and remit sales tax quarterly not just on materials but on labor too. Threads like this make you reevaluate you entire process, doesn't it?


It's that way here too. The state wants to collect the sales tax on goods and services quarterly plus a little extra in the way of Business and Occupation tax, plus the cities wants a little something for their troubles. It's a little like tipping everyone at an Italian restaurant. 

I don't provide separate cost breakdowns beyond total labor and total materials. i tell them I'd have to hire a secretary and that would increase my costs a good bit.


----------



## pcplumber (Oct 12, 2008)

Californiadecks said:


> My company costs are non of thier business, literally. The same reason any other business doesn't reveal there costs. It's absolutely proprietary. But each to thier own, that's just me.


I will agree that if you ask me how much profit I earn then that information is proprietary and I will not tell you. When a customer chooses to do business with you then you can tell the customer that what you pay and earn is proprietary. You have that right, but that may not be the best choice of words if you want to do business with that customer again and get referrals.

You are already doing business with the customer and while you can call your information proprietary there are no secrets that can't be figured out by your customers within a few minutes. Therefore, you can use a better choice of words other than to say, "no, my costs are proprietary and I will not tell you."

Our goal as sales people is to answer questions and end up with a win-win situation. I have many customers ask me how much money I earn. This is proprietary information, but it can be answered very easily without making your customer feel like a worm for asking.

Customer: "Just out of curiosity, I was wondering how much you make on a job like this, and my accountant wants to know how much the materials cost."

Contractor: "We figure about 40% for materials, 40% for labor, 10% for overhead, and 10% for profit."

You didn't have to give any information that is proprietary nor specific and your customer is satisfied.


----------



## Calidecks (Nov 19, 2011)

pcplumber said:


> I will agree that if you ask me how much profit I earn then that information is proprietary and I will not tell you. When a customer chooses to do business with you then you can tell the customer that what you pay and earn is proprietary. You have that right, but that may not be the best choice of words if you want to do business with that customer again and get referrals.
> 
> You are already doing business with the customer and while you can call your information proprietary there are no secrets that can't be figured out by your customers within a few minutes. Therefore, you can use a better choice of words other than to say, "no, my costs are proprietary and I will not tell you."
> 
> ...


What do you think a customer is asking when they want your breakdown of costs? They want to know what you make. I've had this happen. I look for a way out anyway after that. I have to turn down a lot of work each year because I can't do it all nor do I want to. So it's not hard to just make those customers the jobs I don't do.


----------



## pcplumber (Oct 12, 2008)

Californiadecks said:


> What do you think a customer is asking when they want your breakdown of costs? They want to know what you make. I've had this happen. I look for a way out anyway after that. I have to turn down a lot of work each year because I can't do it all nor do I want to. So it's not hard to just make those customers the jobs I don't do.


I've done millions and millions of dollars in business for more that 43 years and never had one customer ask for a breakdown and then argue about the price for the job. I've had hundreds of customers who did not ask for a breakdown and they literally got a bug up their butt, told me that I charged too much and they refused to pay the full amount. In many of those cases I took the loss and walked away because going to court costs too much time, money and it is often impossible to collect when you win. Even if you collect the money it will cost you more money and time than you win.

When selling jobs I will frequently tell customers how much I make for the purpose of closing the sale. There are many businesses that do exactly the same thing i.e. car dealers will show the actual price they paid for a vehicle. I've been to electronic stores where the owners showed the price they paid for appliances. When I sell a water heater I will tell my customers exactly how much I pay for the heater and I even tell how much I pay for my labor.

I will give a bid to paint a house for $7500. The customers ask how many gallons of paint it will take to paint their house. I can play stupid and lose the job, or be honest and tell the customer that I will use 20 gallons. It is not hard to figure that a gallon of paint is about $30 and I will be earning $6900 for my labor for a two-day job.

I had concrete poured around my swimming pool for $14,000. I think it took only 3 truckloads of concrete at $940 per load and I knew the contractors made $10,000 for 3 days of work. I can't argue with the contractor and complain about how much he earned because I signed a contract. I tell my customers it is too late and you can't re-negotiate after the contract is signed. I tell my customers that I will live up to my obligations in the contract and they have to live up to their obligations and pay me. 

Sorry, but I don't see any harm in answering the question when a customer asks. It is a normal question that is probably mostly curiosity.


----------



## Calidecks (Nov 19, 2011)

pcplumber said:


> I've done millions and millions of dollars in business for more that 43 years and never had one customer ask for a breakdown and then argue about the price for the job. I've had hundreds of customers who did not ask for a breakdown and they literally got a bug up their butt, told me that I charged too much and they refused to pay the full amount. In many of those cases I took the loss and walked away because going to court costs too much time, money and it is often impossible to collect when you win. Even if you collect the money it will cost you more money and time than you win.
> 
> When selling jobs I will frequently tell customers how much I make for the purpose of closing the sale. There are many businesses that do exactly the same thing i.e. car dealers will show the actual price they paid for a vehicle. I've been to electronic stores where the owners showed the price they paid for appliances. When I sell a water heater I will tell my customers exactly how much I pay for the heater and I even tell how much I pay for my labor.
> 
> ...


Don't care about your experience mine has been a bit different. Not to mention that type of customer just rubs me wrong so I'm not interested in thier business and I got it like that.


----------



## Big Shoe (Jun 16, 2008)

pcplumber said:


> I don't see any harm in answering the question when a customer asks. It is a normal question that is probably mostly curiosity.


You may have changed my mind. On future estimates I will pay more attention to my material number. Just in case. 


This whole tax thing has my head spinning. I pay tax on all materials purchased. Isn't that what all small businesses do ?


----------



## Stephen H (Feb 18, 2011)

Californiadecks said:


> Don't care about your experience mine has been a bit different. Not to mention that type of customer just rubs me wrong so I'm not interested in thier business and I got it like that.


 it's interesting how different people have different experiences and it shapes their view.

I think My experience with this must be pretty similar to yours-----and VERY different than pc plumbers experience.

I think EVERY person who has asked for a breakdown of pricing like this-----has turned out to be an enormous pain in the azz--- in my experience.

while a person might be curious about something---- that doesn't mean they should ask the question or have any right to an answer----

in the future when asked rude intrusive questions like this---- I think I will respond " mr. customer---when you bang your wife---- do you prefer doggie style or reverse cowgirl ?--- I am just curious......" see how THEY like it, LOL


----------



## RangoWA (Jun 25, 2014)

Big Shoe said:


> You may have changed my mind. On future estimates I will pay more attention to my material number. Just in case.
> 
> This whole tax thing has my head spinning. I pay tax on all materials purchased. Isn't that what all small businesses do ?


Not here. Everything is purchased resale and the customer pays the tax. I don't understand how it works otherwise, when I buy a TV, I pay tax. If the reseller pays tax it gets taxed twice (or more, depending on how many hands it goes through). 

As far as the OP, I expect to be treated how I treat others. I would never ask Costco what they payed for something, or what the cost breakdown is for the shop that paints my car.

I think part of the contractor problem is that you are on their turf so some people feel like they can call the shots or at least want to be part of the process, versus going in to a shop. I had a shop for 26 years and if anyone had ever asked for a cost breakdown they would have been instantly shown the door.


----------



## cwatbay (Mar 16, 2010)

This discussion seemed to go sideways (often) when it came to the tax question and who collects and who pays. 

A couple of things.....I learned many years ago in sales that if a customer ( either commercial or residential ) wants a breakdown of costs, then it's time to go someplace else. In my case, 100% of the time, the client wants to cut those costs .... whether its parts or labor. They will either want to purchase the parts themselves, or from some other vendor, and have you install it. Or, they have someone else, like another contractor, do all or part of the labor. It's a no win situation for you. Rather than just say: "your price is too high", they try to negotiate it down one way or another. 

It took a couple of times and many hours of my work to figure out this tactic, and, that it is universally not good for me. It's better to put effort and time into a project where the "potential" client is not a PIB. 

When we do estimating and billing to the client, we have a "project price" which lists this as a line item (i.e. Project Pricing). It states that all costs are included (less change orders): labor, materials, tax, permits, licenses, etc. That's it.....one price. 

On the back end, we pay taxes on the taxable purchases. I have a California Resale License, but rarely use it to avoid paying taxes at time of purchase...for me, it just isn't worth the time and trouble, plus the cost of paying an account to track all this. At the end of every quarter, I add up the cost of purchases (taxable) that we paid tax one and report it.


----------



## RangoWA (Jun 25, 2014)

cwatbay said:


> On the back end, we pay taxes on the taxable purchases. I have a California Resale License, but rarely use it to avoid paying taxes at time of purchase...for me, it just isn't worth the time and trouble, plus the cost of paying an account to track all this. At the end of every quarter, I add up the cost of purchases (taxable) that we paid tax one and report it.


How does it work there when you bill the customer? If you payed tax on their goods then you don't tax them for those materials? 

We do it all online here now. Paper isn't even an option. The program calculates the percentages but for me it's simple but deductions and itemizing add complexity, I might need an accountant if I did that.


----------



## Jeremiah2911 (Jan 2, 2014)

pcplumber said:


> I've done millions and millions of dollars in business for more that 43 years and never had one customer ask for a breakdown and then argue about the price for the job. I've had hundreds of customers who did not ask for a breakdown and they literally got a bug up their butt, told me that I charged too much and they refused to pay the full amount. In many of those cases I took the loss and walked away because going to court costs too much time, money and it is often impossible to collect when you win. Even if you collect the money it will cost you more money and time than you win.
> 
> When selling jobs I will frequently tell customers how much I make for the purpose of closing the sale. There are many businesses that do exactly the same thing i.e. car dealers will show the actual price they paid for a vehicle. I've been to electronic stores where the owners showed the price they paid for appliances. When I sell a water heater I will tell my customers exactly how much I pay for the heater and I even tell how much I pay for my labor.
> 
> ...



I respect your contribution and what you are saying but I would think with such a successful and enduring career that you would have come across at least one customer that did in fact inquire about your costs. I think if someone asked how many gallons is needed, they are in fact indirectly asking for a breakdown. 

The fact remains that SOME customers are just cheap and don't really care about the contractor and his livelihood. Yep, I'm being blunt.They think labor charges are pocketed and have no cognizance of the cost of doing our business. They believe that paint is the only significant material when painting a house. Someone here said it best once "extension cords aren't cheap". They want you to be licensed and insured but don't understand the costs of premiums. They see cutting your costs as a savings to them. If they can "save" $100 or $1000 they won't refuse. My eyes have been peeled open in the few short years in this industry. 

And yes I can hear the solution now...you have to "qualify" customers better. But I believe there are just some areas, communities, cultures etc. where qualifications wouldn't make a particular difference in the outcome.


----------



## cwatbay (Mar 16, 2010)

RangoWA said:


> How does it work there when you bill the customer? If you payed tax on their goods then you don't tax them for those materials?
> 
> We do it all online here now. Paper isn't even an option. The program calculates the percentages but for me it's simple but deductions and itemizing add complexity, I might need an accountant if I did that.


At this point, any monies collected beyond our cost of materials is posted as labor. This would not work if you do a lot of business, several hundreds of thousands or millions of dollars, and, you mark up your materials costs as part of your profit. Which of course your would need to calculate out your taxable costs, and, pay the tax on the difference between what your paid and ultimately what your charged. 

For us, we do mostly sub-contracting work for a host of other contractors who supply parts and materials. Therefore, the bulk (90%+) of our income is labor. For what little materials we do supply on these sub-contracted projects....we then go back to what I said earlier about paying tax on materials and all other charges are posted a labor. 

Hopefully that makes sense.


----------



## EthanB (Sep 28, 2011)

If you are specifying the material cost on your invoices and that cost is marked up from what you paid, you need to be charging sales tax. If you don't break things out then you can argue that you paid sales tax and passed the complete charge on to the customer with no increase. Retailers buy tax-free and then mark up the product so that sales tax will be charged on the total amount to the end user, as sales tax is intended.

For some labor sales tax is also necessary. If you are manufacturing a product and selling it as a product, with delivery and/or installation, you probably should be paying sales tax. If you are performing all the work on-site, there is usually no sales tax. It is a fine line between what is considered "goods" and what is considered "service".

Don't even get me started on use taxes.


----------



## TNTRenovate (Aug 19, 2010)

EthanB said:


> If you are specifying the material cost on your invoices and that cost is marked up from what you paid, you need to be charging sales tax. If you don't break things out then you can argue that you paid sales tax and passed the complete charge on to the customer with no increase. Retailers buy tax-free and then mark up the product so that sales tax will be charged on the total amount to the end user, as sales tax is intended.
> 
> For some labor sales tax is also necessary. If you are manufacturing a product and selling it as a product, with delivery and/or installation, you probably should be paying sales tax. If you are performing all the work on-site, there is usually no sales tax. It is a fine line between what is considered "goods" and what is considered "service".
> 
> Don't even get me started on use taxes.


This is not correct. Depending on your state you do not have to charge sales tax on the markup.


----------



## The Coastal Craftsman (Jun 29, 2009)

The issue I have found when I used to break cost down was they would nit pick everything. As an example I would get material order 1 from supplier A material order 2 from Supplier B etc etc and some of that material is cheaper at supplier C but I'm not driving across town for just that. The issue is the customer don't care about how much time you have to spend getting materials and all they see if the price they pulled up online which at times is 1/2 what I pay local. From that point on that think you are ripping them off. I have had customers ask me for my invoices from my supplier for stuff like doors and windows because they think I'm adding to much % to my cost yet I add none. 

There's a contractor in this area who breaks everything down to the last screw. 

His bill reads like this 

Item 21342 install toilet roll holder with 4 size 8 wood screws course thread $34.56 labor $3.76 materials

Item 21343 install towel rail 18" with 4 screws size 8 + 4 drywall anchors $36.43 labor $5.67 materials 

Item 21344 install toilet with 1 Oatey wax ring 1/5th tube of clear bathroom silicone $87.45 labor $13.45 materials 

The customer flipped out when she see the break down. She thought she was getting ripped off because when broken down them prices looked crazy yet mine were more as a total as a job but that one total stops this from happening.


----------



## pcplumber (Oct 12, 2008)

Jeremiah2911 said:


> I respect your contribution and what you are saying but I would think with such a successful and enduring career that you would have come across at least one customer that did in fact inquire about your costs. I think if someone asked how many gallons is needed, they are in fact indirectly asking for a breakdown.
> 
> The fact remains that SOME customers are just cheap and don't really care about the contractor and his livelihood. Yep, I'm being blunt.They think labor charges are pocketed and have no cognizance of the cost of doing our business. They believe that paint is the only significant material when painting a house. Someone here said it best once "extension cords aren't cheap". They want you to be licensed and insured but don't understand the costs of premiums. They see cutting your costs as a savings to them. If they can "save" $100 or $1000 they won't refuse. My eyes have been peeled open in the few short years in this industry.
> 
> And yes I can hear the solution now...you have to "qualify" customers better. But I believe there are just some areas, communities, cultures etc. where qualifications wouldn't make a particular difference in the outcome.


I do have many customers who ask how much things cost. I never had a problem with a customer who asked about the costs.


----------



## CITY DECKS INC (Sep 4, 2012)

phrs_50 said:


> Hi All,
> 
> New to the forums here. I had a question hopefully someone could provide some insight to.
> 
> ...



never.. your invoice is all they need. also any enegry ratings can be obtained from mfg web site so don't them full ya in anyway shape or form ..good luck


----------



## TNTRenovate (Aug 19, 2010)

I have never had a customer ask, prospects sure, but that's as far as it ever goes. I have yet to hear a good argument as to why it is needed to make a decision. My price is my price. Either one thinks it is fair trade for the work or it is not. Knowing my costs have no benefit to my prospects.


----------



## pcplumber (Oct 12, 2008)

What is the difference between doing business with a homeowner and doing business with generals or subcontractor? Do you tell your general that your cost is none of his business and does your sub tell you that his costs are none of your business. 

When you do business with a general it is very critical that the general knows that you are on top of your game. The general has to know all your costs because he doesn't want to sign a contract and then find out that you screwed up with your calculations and then you screw up his job. 

I know more about the exact costs and profits than most subs know about themselves. This is my job when I am the general. On my current and large underground utility job the general and owner know all my costs almost to the penny for labor, materials, insurance, overhead and profit. I have to tell them all this information because my contract states that I have to give them a Sworn Materials Statement that lists every supplier and the total cost. I have to give the general a daily report listing every employee, their number of hours and the amount they are paid. This is because the General and Owner want to make sure my employees are paid and they want this information in case an employee files a complaint with the labor board. Insurance is easy to guesstimate and overhead for most companies is about the same percent. Do the math and they know exactly how much my profit is.

When a customer asks how much something costs I will not to be sarcastic. I will not evade answering questions. Most customers already have a very good ballpark idea regarding costs and profit for their jobs. I would rather answer in a friendly manner, nip their concerns or curiosity in the bud, put their anxiety to sleep and move forward without having to worry about a backlash. In fact, if the customer was asking for some negative reason I would rather put their concerns to sleep at that moment rather than let it fester into something that gets out of control.

This past Monday evening, I just finished installing a 6 inch and a 4 inch flexible water connector in a government building. The job took 4 evenings and the total contract amount was huge. Several top management people asked the cost of the connectors as we were installing them and they only asked because they were curious. I told them twice the price that I actually paid and kept working. That information was proprietary, but I am not going to get uppity and snotty about the questions. 

Even homeowners can be curious.


----------



## TNTRenovate (Aug 19, 2010)

pcplumber said:


> What is the difference between doing business with a homeowner and doing business with general or subcontractor? Do you tell your general that your cost is none of his business and does your sub tell you that his costs are none of your business.
> 
> I know more about the exact costs and profits than most subs know about themselves. This is my job when I am the general. On my current and large underground utility job the general and owner know all my costs almost to the penny for labor, materials, insurance, overhead and profit. I have to tell them all this information because my contract states that I have to give them a Sworn Materials Statement that lists every supplier and the total cost. I have to give the general a daily report listing every employee, their number of hours and the amount they are paid. This is because the General and Owner want to make sure my employees are paid and they want this information in case an employee files a complaint with the labor board. Insurance is easy to guesstimate and overhead for most companies is about the same percent. Do the math and they know exactly how much my profit is.
> 
> ...


There is a huge difference in doing a commercial project or government project and residential remodeling.

And yes, when I was a sub doing low voltage we never were asked our costs or gave them.

If a customer doesn't think that my price is fair then they need to find another contractor. Again, no one has shown me a reason to give that information away.

You have yet to answer a good question. Do you ask a restaurant how much their costs are of their burger.

There is also no uppity or snotty attitude given. I don't need to know how the guy next to me is doing. As long as I am doing what I need, that's all that matters, to me anyway.


----------



## CarpenterSFO (Dec 12, 2012)

I also use an agreed values clause in my contract. It states that the prices in the contract are agreed values, may not be related to the actual costs of materials and labor, and won't change if actual costs are lower or higher than expected. In my experience it slams the door on any attempts to discuss price, once the contract is signed.


----------



## EthanB (Sep 28, 2011)

TNTSERVICES said:


> This is not correct. Depending on your state you do not have to charge sales tax on the markup.


Ok. Correction.


EthanB said:


> *In some states,* if you are specifying the material cost on your invoices and that cost is marked up from what you paid, you need to be charging sales tax.


It's been true in the four states I've lived in. There can be exceptions based on the zone or end user but, when acting as a reseller, businesses usually need to charge sales tax.


----------



## Calidecks (Nov 19, 2011)

pcplumber said:


> What is the difference between doing business with a homeowner and doing business with generals or subcontractor? Do you tell your general that your cost is none of his business and does your sub tell you that his costs are none of your business.
> 
> When you do business with a general it is very critical that the general knows that you are on top of your game. The general has to know all your costs because he doesn't want to sign a contract and then find out that you screwed up with your calculations and then you screw up his job.
> 
> ...


Yes I would tell a general my costs are non of his business and I don't ask my subs thier cost because, it's non of my business.


----------



## griz (Nov 26, 2009)

Californiadecks said:


> Yes I would tell a general my costs are non of his business and I don't ask my subs thier coast because, it's non of my business.


Over the years, depending on the sub, I have asked about their costs and how they arrived at them. 

Many were literally guessing and had no real idea how to determine costs on a consistent basis.

I only did this for guys I cared about. As I have said previously it did me no good for a sub not to make money and be successful.


----------



## CarpenterSFO (Dec 12, 2012)

Californiadecks said:


> Yes I would tell a general my costs are non of his business and I don't ask my subs thier coast because, it's non of my business.


+1. On a fixed price job I can't imagine a general asking about my costs, and I've never asked a sub about costs.


----------



## hdavis (Feb 14, 2012)

EthanB said:


> If you are specifying the material cost on your invoices and that cost is marked up from what you paid, you need to be charging sales tax.


Depends on the laws you're operating under... Breaking out with mark up isn't necessarily reselling


----------



## griz (Nov 26, 2009)

CarpenterSFO said:


> +1. On a fixed price job I can't imagine a general asking about my costs, and I've never asked a sub about costs.


Why not?

FYI- subs are ALWAYS questioned about their bids just to make sure they have everything covered.


----------



## Calidecks (Nov 19, 2011)

griz said:


> Over the years, depending on the sub, I have asked about their costs and how they arrived at them.
> 
> Many were literally guessing and had no real idea how to determine costs on a consistent basis.
> 
> I only did this for guys I cared about. As I have said previously it did me no good for a sub not to make money and be successful.


This is so important, I call my subs and verbally go over thier bid, after I recieve thier proposal and just before I submit to the owners. I ask, did you get this or that or this etc. I want to make sure when they are done on my job they made what they needed. The next time I call they will remember my jobs are good paying jobs. Not to mention they have become personal friends to me as well.


----------



## hdavis (Feb 14, 2012)

Costs, margins, mark ups, profits, labor - all fall under the general heading of competitive information. You may not consider it company confidential at all, but if you were to start sharing it among your competitors, that could be a problem.


----------



## Calidecks (Nov 19, 2011)

hdavis said:


> Costs, margins, mark ups, profits, labor - all fall under the general heading of competitive information. You may not consider it company confidential at all, but if you were to start sharing it among your competitors, that could be a problem.


simply put it gets shared with no one, except insiders.


----------



## CarpenterSFO (Dec 12, 2012)

griz said:


> Why not?
> 
> FYI- subs are ALWAYS questioned about their bids just to make sure they have everything covered.


I understand your point about wanting them to succeed (both to help me succeed and because I want them to succeed), but I've never asked them about their costs because I'm a very small contractor and they know more about their business than I do.

I do go over their quotes with them to make sure that the scope of work is complete and they aren't missing any complications or special requirements that I have. And by "go over their quotes" I mean that I keep on them until I'm certain that what they're quoting is what I need.

It's something new for me to think about. Just for kicks I'll ask a few questions about costs on the next few jobs I sub to one of my regular subs. I'm bound to learn something, anyway.

- Bob


----------



## Djeanis (Mar 15, 2006)

pcplumber-
"I have a home in Nevada and my ex-wife was living in the home. I purchased a car in Nevada where the sales tax in lower than California and my ex-wife planned to stay in Nevada. A few months later, she moved to California and when she registered her car she had to pay the difference in the sales tax. "

Ok, here is how it works under "full faith and credit" of the United States of America. If your wife was homesteaded in Nevada and purchased the car in HER name, or if you both were homesteaded in Nevada when the car was purchased in NV, then the taxes were PAID in FULL.

If you were homesteaded in CA and the car was purchased in NV then you owe the difference in sales tax (still a fraud in my opinion but the thinking is that one would travel to a zero sales tax state to purchase big items otherwise).

The idea is that if you hold a california DL or property as homestead then you should be purchasing in ca and paying the tax. If you are in NV with a homestead and DL there, then when MOVING to CA- the State of CA MUST give FULL FAITH AND CREDIT under interstate (Federal) law. ZERO TAX OWED.

Notice that even YOU had trouble stating WHO the owner was at purchase, you or wife, and you specifically stated the car was purchased in NV to save tax money. The confusion was started on your end.

Hope this helps. And if you (two or her if in her name) were HOMESTEADED in NV then the state of CA owes you money. Call a NV atty and have him write letter to the state of CA, If CA refuses to give the $ back sue them in federal court in NV. You should gain back the fraudulent gain by the state of CA.

Think of it this way. If I lived in OH and purchased a car there and had an OH DL and homestead, then my employer transferred me to CA why would I owe anything to CA? The taxes were paid in FULL on a NEW vehicle in OH. Even if the car only has 2500 miles on it when it reaches CA, it is USED, not new and therefore depreciated (usually 5-7K the first mile of driving) How could the state of CA re-tax a used vehicle as new? it gives NO full faith and credit among the states and is illegal to do that.

Converslely you have a CA DL and live there. You have a summer home WA. You purchase a car in WA, pay taxes (next to zero) and drive the car to CA. You have done so in the eyes of the law to avoid taxation. I disagree but there you have it. you will owe the tax difference.


----------



## Calidecks (Nov 19, 2011)

I wouldn't dare ask my plumber for a bid on plumbing a house then ask him what he's paying for the tub, hot water heater or fixtures, etc. But I would ask him what he's charging me for those items. However I would make sure he is bidding on everything and every item we asked for and the SOP is correct.


----------



## Calidecks (Nov 19, 2011)

There's a huge difference in the question. For example. "What does it cost for 100' of XYZ handrails"? As opposed to "What are you paying for 100' of XYZ handrails"?


----------



## Jeremiah2911 (Jan 2, 2014)

I believe we all know the difference between curiosity and someone being pretentious. Curiosity is their little kids missing nap time to shadow you and ask a bunch of questions.


----------



## Cmac9000 (Jan 7, 2014)

The only time we have had to provide original invoices from subs is for insurance work. I think they want to ensure they are not being charged double by different companies they have on site (demo crews hiring plumbers and the reconstruction crew hiring the same plumber). They want to make sure the two bills are for different jobs. That's the only time I have seen it. Otherwise it's a crazy question to ask your contractor.


----------



## 480sparky (Feb 1, 2009)

I'd have to charge a helluva lot to provide receipts for a given job.

_Exceedingly rare _is the job where all my material is purchased during the time the work is performed. The vast majority of material is bought in bulk weeks, months, even _years_ prior to use.

I buy wire in 1000' spools, device boxes in 100-packs, devices in lots of 100, 200 or even 500. Sometimes is takes 2 or 3 years to use up a single lot purchase. I've got a 1000' roll of #4 copper I purchased sometime back 4, 5, maybe 6 years ago (stocked up so I could rebuild 100a electrical services when storms come through and rip 'em down) that I'm still working from. 

Egads..... a $10,000 job might take me *a whole, solid week* to go back through all those years of files for receipts and invoices to find ALL of them that would apply to a given job I did last week. So one can be well assured I'm going to charge accordingly for this bookkeeping time.

And f**k...... someday I might use that PVC 1½" LB that's been sitting on the shelf for at least 10 years now. The paperwork for _that_ dumb thing has long since been destroyed.


----------



## pcplumber (Oct 12, 2008)

All of this was Food For Thought and a lot of fun to see all the different opinions.

Thank you very much!


----------



## thom (Nov 3, 2006)

EricBrancard said:


> How is it relevant to him? He's buying a home from you, you are the one paying sales tax on the materials.


Not necessarily, depends on state law. 

For example, here in NM though we have a sales tax (we call it a gross receipts tax) my purchases of material and labor on a job are exempt (I must provide them with a completed non-taxable transaction certificate), but I do charge my customer full sales tax on the job. 

So, I build you a custom house for $200K, I charge you an additional $14K sales tax which I then send to the state.


----------



## thom (Nov 3, 2006)

You are not required to provide the information, it is not in your contract. You may choose to but if you do, charge for it. Certainly an extra 20% would be enough to cover your costs but even then some will be estimated. 

How do you deal with overhead? Trucks, insurance, phone, office, vacation time, etc? How do you deal with your own pay? How do you deal with a sales commission to yourself? On small jobs, these are big deals.


----------



## pmarz1 (Jan 25, 2007)

For starters, you provided a quote, hopefully with a payment schedule, and it was accepted. The only thing you would need to provide is requests for payments that meet the accepted schedule and proof that the work associated with the schedule has been completed. If a schedule doesn't exist and you'll be compensated in a lump sum at the end of the job, you can construct a bill that has a line item of the work you performed and a total cost, a line item summarizing the materials(i.e. framing lumber, trim, roofing, windows, etc.) with a total cost and if any subs were involved such as plumbers, electricians, etc., a line item for each of them with their total cost. You definetely don't have to itemize each and every item you used on the job unless you agreed to do the job on a cost+ basis.


----------

