Taxes and credit card processing fee issues.

The amount of regulations and requirements a new lawn care business owner needs to comply with seems to grow by leaps and bounds each and every year. As we will see from this discussion on the Gopher Lawn Care Business Forum, it’s a lot easier to get things right early on than it is to try and course correct once the mowing season is going.

One lawn care business owner wrote “well to start, this experience of starting and running a lawn care business is all new to me. It has taken months for me to figure out how to correctly bill a customer and to cover all my expenses and taxes. I have so far taken a loss when it comes to putting away money for taxes because taxes wasn’t something that I figured into my original lawn care quotes.

Since realizing that I need to collect sales tax on my services I have quoted all my new customers a price that includes my sales tax expense. I have only had one customer complain so far about there being sales tax on a service.

I’m trying to do the right thing and keep my business legal so it can grow in the years to come. I’m not trying to avoid the system, I just think it takes some time to get your feet wet before your get everything lined up.

Now onto my existing customers. I just am not sure what to do with them to and how to explain I need to collect sales tax from them now. If a customer has a set price, I think I’m going to have to eat a little profit to cover the sales tax for this year. I have put some thought into the situation and realized that I would be risking a few great customers over a few dollars if I told them I had to raise their service fee.

Hopefully, by building trust with my lawn care customers, they will be more flexible in the future with the taxes that I should be asking for. I’m willing to take a small loss because most of my existing customers are bi-weekly and the sale tax would only be $5.00 a month per customer and right now I can’t afford to lose them.

Which leads me to a new customer I got last week. I don’t know why, but it seems the further I go with this, the more customers seem to want to throw me a curve ball. At first they wanted the standard lawn service (mow, edge, weedeat, blow). I agreed to mow their lawn but to be competitive and get the job, I had to lower my standard price by $2 as long as they paid me in cash.

So the first time I’m out, she pays me by cash, which we all know is the best. Yesterday, I get a call from her requesting that she wants to be billed monthly by invoice and that she wants to pay with a credit card or by using paypal.

Now since I verbally agreed to lower my price to gain a cash customer, is there anyway to approach the lady and tell her now I’m going to have to invoice her with sales tax included and a slight service charge for the use of a credit card? Using paypal or a credit card costs me more money, like 3% or so.

She almost makes me feel like she doesn’t want to pay anything but expects the world when it comes to her lawn maintence. She has made reference that she has had like 3 lawn guys since moving into her house 2 years ago. Everytime I think about catering to her billing and payment needs, I’m thinking about what she must have done to get rid of the 3 other lawn guys. It’s really frustrating.

I know you need to have confidence in your company and the way you operate but, how do you approach a customer and tell them that what we initially agreed upon isn’t going to work and that if we can’t agree on this then we are going to have to part ways?

I think the easy thing about the lawn care business is the physical part. It’s the customer service, marketing, billing and other day to day stuff that makes it hard enough that you wanna give up!!!”

A second lawn care business owner said “I don’t get it, why do business owners constantly cut their own throats by not charging tax on cash transactions? If you mess up and get audited you are finished!

You shouldn’t be having different prices based on cash, check, or credit card. If you are thinking you will try and charge a processing fee for your credit card customers, you better check your credit card vendor agreement. Most agreements make it crystal clear you can’t do that. You need to be professional and be legal ALWAYS.

As far as changing your rate mid stream I think you are going to be stuck if you want to keep her as a customer. Most customers aren’t going to go along with a new billing policy mid year. If you want to change it, either wait until the end of the year to do so or be prepared to lose them when you bring it up.

I have learned from years of trial and error that everyone gets a monthly bill and pays in advance before I service their property. People try the cash discount payment thing with me all the time and I tell them I am required by law to collect sales tax on my services, regardless of how they pay, and I don’t break the law.”

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