PestBossPro Blog — Billing & Payments

Sales Tax on Pest Control Invoices: What to Ask Your Accountant

Sales tax is the part of pest control billing most owners would rather not think about. It is also one where a mistake can follow you for years, because uncollected tax does not disappear; it becomes a bill you pay yourself. This article is not tax advice. It is a list of what to understand and what to ask the person who gives you tax advice.

Tax Is Local, So the Answer Is Too

Closing out a cancelled account is the subject of The Final Pest Control Invoice When a Customer Cancels. Whether that final invoice, or any invoice, carries sales tax depends on where you work.

In the United States, sales tax is set by states and often by counties and cities on top of that. Some states tax pest control services, some do not, and some tax certain kinds of pest work but not others. Commercial and residential services can be treated differently. In Canada, Australia, New Zealand and the UK, consumption taxes work differently again. There is no single rule for the industry, which is exactly why you need a local answer.

Questions to Bring to Your Accountant

An hour with an accountant who knows your area is worth more than any article. Go in with specific questions:

• Are pest control services taxable where I work? In each state, county and city you service, not just where your shop is.
• Does it matter what kind of service? General pest, termite, mosquito, rodent exclusion, WDI inspections and wildlife work may each be treated differently.
• Does residential versus commercial change anything?
• Which rate applies: where my business is, or where the service is done?
• Are some customers exempt? Churches, schools, government buildings and some nonprofits may provide exemption certificates.
• How do I handle tax on prepayments for a mosquito season or annual plan?
• Do I owe use tax on products I buy for treatments, separate from what I charge customers?
• How often do I file, and when?

Write the answers down. They become the instructions for setting up your invoices.

Set It Up Once

PestBossPro invoices include sales tax. Once you know what is taxable and at what rate, set it up once, and every invoice created at completion carries the right tax without anyone working it out by hand. The tax shows on its own line, separate from the services.

Keeping tax on its own line matters for a few reasons. Customers see what they paid for the service and what they paid in tax. Commercial customers' bookkeepers need the tax amount separately. And when you file, you need to know how much tax you collected, not just how much you billed. Clear line items in general are covered in Pest Control Invoice Line Items: Writing Charges Customers Understand.

Exempt Customers

If your accountant tells you some customers are exempt, get their exemption certificate before you stop charging tax, and keep it on file. A church or school telling you over the phone that they are tax-exempt is not enough if you are ever audited. Make sure that accountSet the account so its invoices do not carry tax, and noteapos;s invoices do not carry tax, and note on the client record that the certificate is on file and when it expires, if it does.

Tags and custom fields on the client record are handy for this: a tag for tax-exempt accounts makes them easy to find when certificates need renewing.

When You Service Several Areas

A pest control company with a truck or two often crosses county or even state lines. If the tax rate depends on where the service is done, an account in one town may carry a different rate than an account in the next. Because PestBossPro keeps each address separately, with its own city, state and zip, you have the information needed to apply the right rate per address. Ask your accountant how to set it up for the specific places you work.

For commercial accounts with locations in several places, the monthly statement still covers every location, with each visit listed at its own address.

Look at Tax Every Month

Make sales tax part of your month-end routine. Look at the tax collected for the month, compare it to what you expected from the work you did, and set the money aside. Collected sales tax is not your money, and treating it as part of the month's revenue is how owners end up short when the filing is due. The month-end routine is in The Pest Control Month-End Billing Review: A One-Hour Routine.

Get the Answer, Then Let the Invoice Do It

Sales tax on pest control is local and specific, so get the answer from a professional who knows your area. Once you have it, set it up once, keep exemption certificates on file, and let every invoice carry the tax on its own line. For the rest of PestBossPro's billing tools, visit the pest control invoicing software page.