What Is Sales and Use Tax?

If you’re planning on opening a business in Florida, there are many things you’ll need to plan for. For example, will your business be a sole proprietorship, a limited liability corporation (LLC) or a partnership corporation?  Will you have salaried employees or a 1099 freelance staff? Will you need to rent office space, or will you be working remote?

Once you’ve hammered out all of the nitty-gritty details, you’ll need to start planning for taxes. In the state of Florida, there are many services that are subject to sales tax. And while many people expect that sales tax will need to be collected if they’re selling tangible goods, such as photo frames, jewelry or homemade beach blanket, some new business owners don’t realize that certain types of services are taxable as well.

The Florida Department of Revenue stipulates that the following services are subject to taxation:

  • Commercial Pest Control Services
  • Commercial/Residential Burglary & Security Services
  • Detective Services
  • Nonresidential Cleaning Services

If the company you’re planning on starting is blanketed beneath one of those categories, you’ll need to file Form DR-1 to register with the FL Department of Revenue. In filing this form, you’ll be permitted to collect (and remit) sales tax.

When you invoice a client for a taxable service, you’ll need to list FLORIDA SALES TAX as a separate line item on each receipt. For example, if you’re billing for $200 in nonresidential cleaning services, the sales tax must be listed separately, so the consumer understands the breakdown of their invoice.

State sales tax is set at 6%, however, that’s not the only rate that needs to be accounted for. Local taxes must also be added; that rate can add up to an additional 2.5% to your clients’ bill. This means that the maximum sales tax rate, when you add state and local taxes, is 8.5%

The FL Department of Revenue will provide your business with a schedule that you’ll need to remit sales taxes (most businesses need to pay monthly.) If you don’t remit sales taxes, your business can be penalized.

You’ll also want to keep in mind that just because your business doesn’t fall within one of the above stated categories, that’s not to say you’re in the clear. There’s a chance you’ll still need to file Form DR-1.

For more information on FL sales and use tax or to learn if your company will need to collect (and remit) state taxes, call Hughes, Snell & Co PA today to learn more.