Include Tax In Estimate? - Business - Contractor Talk

Include Tax In Estimate?

 
Thread Tools Search this Thread Display Modes
Old 04-06-2014, 08:32 PM   #1
Contractor
 
Kolbym's Avatar
 
Trade: Trim and Light Remodel
Join Date: Aug 2012
Location: Lynchburg VA
Posts: 111
Rewards Points: 228

Include Tax In Estimate?


I haven't formally introduced myself to contractortalk but I've been fairly involved. To sum up my history I could say I'm a young contractor and I've done well estimating and providing bids that include all overhead and profit etc etc etc. I feel confident charging what a legitimate contractor should charge. Here is my dilemma/question: As a young contractor I still have a lot of WOM clients who are primarily interested in price. The toughest sale I have right now is informing clients that my business is legit and I have to pay significant taxes on all the work I perform. How do you inform/sell a client on the fact that your price isn't just X$ per hour, that your price includes satisfying the insatiable federal government? I'm bidding a bathroom remodel right now which I know could be done under the table for almost nothing...but it a legit contractor does is legally the price almost doubles...how do you deal with that?
Kolbym is offline  

Warning: The topics covered on this site include activities in which there exists the potential for serious injury or death. ContractorTalk.com DOES NOT guarantee the accuracy or completeness of any information contained on this site. Always use proper safety precaution and reference reliable outside sources before attempting any construction or remodeling task!

   

Advertisement

 

Old 04-06-2014, 11:06 PM   #2
Pro
 
Stoneyard's Avatar
 
Trade: Journeyman Carpenter
Join Date: Mar 2014
Location: Mn.
Posts: 106
Rewards Points: 249

Re: Include Tax In Estimate?


" How do you inform/sell a client on the fact that your price isn't just X$ per hour"

Tell them your jobs are not bid on an hourly rate, regardless of how you bid.

There are many factors that go into a bid:
overhead
materials
labor
accessibility
profit margin
markup
size of the job
location of the job... Just to name a few.

And to be honest this should never come up unless they specifically ask you. If you have done work for them in the past at an hourly wage then politely explain to them how your business has changed and you no longer work by the hour but have opted to start giving bids for work from now on. Tell them you have re-structured the business to be able to expand and acquire more work. If at that point they still don't accept it, move on to better clients.

Advertisement


Last edited by Stoneyard; 04-06-2014 at 11:17 PM.
Stoneyard is offline  
Old 04-06-2014, 11:10 PM   #3
Fire up the BBQ
 
griz's Avatar
 
Trade: GC
Join Date: Nov 2009
Location: CA
Posts: 21,758
Rewards Points: 2,350

Re: Include Tax In Estimate?


On the flip side I've NEVER known anybody in this business to do a small job with out a contract etc etc etc....
__________________
SOME JOBS JUST AREN'T WORTH DOING:
griz is online now  
Sponsored Links
Advertisement
 
Old 04-06-2014, 11:22 PM   #4
GC/carpenter
 
Calidecks's Avatar
 
Trade: Decking, Railing, Carpenter/General Contractor
Join Date: Nov 2011
Location: Anaheim Hills, California (OC)
Posts: 36,628
Rewards Points: 18,658

Re: Include Tax In Estimate?


I think you after you raise the price because you went legit they may not want to use you anymore. They probably only used you before that because you WERENT legit and your price reflected that.

So move on find the new type of customer that wants a legitimate contractor. But first at least give the others a chance. You never know they may want you to still do there work.
Calidecks is offline  
Old 04-07-2014, 09:34 PM   #5
Pro
 
mbryan's Avatar
 
Trade: water restoration
Join Date: Dec 2010
Location: Colorado
Posts: 1,225
Rewards Points: 552

Re: Include Tax In Estimate?


http://www.ebay.com/itm/How-to-Sell-...-/131135097818
mbryan is offline  
Old 04-08-2014, 05:06 AM   #6
Pro
 
ranteso's Avatar
 
Trade: really?, Contractor Talk is for "Professionals"?
Join Date: Nov 2010
Posts: 333
Rewards Points: 424

Re: Include Tax In Estimate?


People who believe a "cash" payment project can be executed substantially less than a check payment project have not a clue about their business costs.

How does cash mysteriously make all the costs go away or reduce them? Everything still costs the same amount regardless of how you are paid.

Sure you can circumvent Uncle Sam to a degree, pocket cash and save on your own end, but why are you willing to be a criminal by intentionally evading your tax obligation to save some stranger money?

You're not in business to save people money, you're in business to make money.

Be a pro, present yourself as a pro, charge like a pro and do a pro job
ranteso is offline  
The Following User Says Thank You to ranteso For This Useful Post:
twill59 (04-08-2014)
Old 04-08-2014, 05:10 AM   #7
Pro
 
ranteso's Avatar
 
Trade: really?, Contractor Talk is for "Professionals"?
Join Date: Nov 2010
Posts: 333
Rewards Points: 424

Re: Include Tax In Estimate?


and tax is an overhead cost, it's buried in your numbers, unless your business is required to collect sales tax, then you show that tax on your invoice.
ranteso is offline  
Old 04-09-2014, 03:03 PM   #8
Pro
 
SectorSecurity's Avatar
 
Trade: Low Voltage Wiring
Join Date: Nov 2013
Location: Ontario
Posts: 4,048
Rewards Points: 2,828

Re: Include Tax In Estimate?


How is sales tax alone doubling your price? Explain the tax part to them in a way they understand the money isn't coming to you but going to the government.
SectorSecurity is offline  
Old 04-09-2014, 03:24 PM   #9
Pro
 
Big Shoe's Avatar
 
Trade: Carpentry,drywall,trim. Part time painter.
Join Date: Jun 2008
Location: Florida
Posts: 4,415
Rewards Points: 1,910

Re: Include Tax In Estimate?


When people ask me how much do I take off if they pay me cash my response is "same price".
__________________
Expect the Unexpected
Big Shoe is offline  
The Following User Says Thank You to Big Shoe For This Useful Post:
TBFGhost (04-09-2014)
Old 04-09-2014, 05:08 PM   #10
Contractor
 
Kolbym's Avatar
 
Trade: Trim and Light Remodel
Join Date: Aug 2012
Location: Lynchburg VA
Posts: 111
Rewards Points: 228

Re: Include Tax In Estimate?


thanks for the responses guys. i guess my real question was if it's legal/feasible to show the burden of business in a quote. we all know the math... if there were no business burden i could do "x" for "$" but I'm finding it tough to sell home owners on the fact that it costs more than my working wage to stay in business. does anyone. break down their their business costs for customers or should i walk away and find better customers?
Kolbym is offline  
Old 04-09-2014, 05:32 PM   #11
Hair Splitter
 
TNTRenovate's Avatar
 
Trade: General
Join Date: Aug 2010
Location: Naperville, IL
Posts: 18,244
Rewards Points: 1,100

Re: Include Tax In Estimate?


Quote:
Originally Posted by Kolbym View Post
thanks for the responses guys. i guess my real question was if it's legal/feasible to show the burden of business in a quote.

If you have to go that fair to convince someone that your price is worth it, you need to move on to a legit customer. Any customer that you have to prove that what you are charging is a fair price isn't someone that you want to work for.

we all know the math... if there were no business burden i could do "x" for "$" but I'm finding it tough to sell home owners on the fact that it costs more than my working wage to stay in business.

What you need to focus on is not price but value. Sell yourself and what you bring. Sell what separates you from your competition. If you find that you are always battle price during a sell, you really need to up your price more and weed these customers out of the equation.

does anyone. break down their their business costs for customers or should i walk away and find better customers?
Never. It's none of their business what my costs are and would they really understand my costs just by knowing what they are. It only serves to bring up more questions.

My advise is to not be afraid to walk away from a potential job. It may hurt at first and money might be tight, but after a bit of time has passed you will begin to build a client base that respects your time and efforts and you will never have to worry about explaining why you charge what you charge.
__________________
Tried & True on Facebook
Tried & True Website
Quote:
Originally Posted by CarpenterSFO View Post
You ask for your money frequently, and you collect it quickly, else you stop working immediately.
TNTRenovate is offline  
Old 04-09-2014, 07:24 PM   #12
Pro
 
huggytree's Avatar
 
Trade: plumber
Join Date: Nov 2013
Location: wisconsin
Posts: 819
Rewards Points: 1,418

Re: Include Tax In Estimate?


i wouldnt explain anything about my prices to a customer....any info you give him will be used against you. if a customer is questioning your pricing and you give a break down you will find they question every item of that price breakdown....ive been there several times and it only gets worse when you explain and break down expenses.

give your bid...either they choose you or not

some customers are willing to pay full price for a legit contractor....find those customers...
some people want to pay 1/2 price and look for the deal.....these are not your customers...screen them out and move on asap

you choose your customers.....if your customers are questioning your prices heavily i would change the way you operate...your attracting people who ARENT your customers

ive tried to explain why i am better and cost more to homeowners who look only at price...i cant say ive ever turned a price only customer into a quality/service minded customer....either they get it or they dont....ive seen them rolling their eyes at me while i show them parts out of my van and try to explain the differences.....these people think every tradesman is the same....they dont realize bids are never apples to apples
huggytree is offline  
Old 04-10-2014, 11:31 AM   #13
Pro
 
SectorSecurity's Avatar
 
Trade: Low Voltage Wiring
Join Date: Nov 2013
Location: Ontario
Posts: 4,048
Rewards Points: 2,828

Re: Include Tax In Estimate?


I don't get how you are going to show them your business burdens, are you going to show them what you pay for gas, vehicle cost, tools ect ect on your invoice? Even if you did something tells me the customer isn't going to care.

You just have to factor these cost into your estimate and go with it, if they don't like your cost move on.

As far as not putting Tax on the estimate then trying to put it on the final bill that sounds sleazy to me. I would be questioning why all of a sudden you are charging tax if it wasnt shown on your estimate.
SectorSecurity is offline  
Old 04-10-2014, 11:43 AM   #14
Contractor
 
Kolbym's Avatar
 
Trade: Trim and Light Remodel
Join Date: Aug 2012
Location: Lynchburg VA
Posts: 111
Rewards Points: 228

Re: Include Tax In Estimate?


this is more of a rhetorical question/thread than anything. it's probably just beating a dead horse also. the question is really a sales question. when you know you're bidding against illegitimate contractors, would it help to try to prove to the customer why my cost is more. i know the answer deep down, just wondering if anyone has found an effective way to deal with a costumer who has the money, is not primarily interested in the lowest price, but is fine with paying a "contractor" under the table in order to save a buck. I've already submitted my bid on this job and have walked away not expecting a call.
Kolbym is offline  
Old 04-10-2014, 12:48 PM   #15
Pro
 
concretemasonry's Avatar
 
Trade: Masonry consultant
Join Date: Nov 2006
Location: MSP, Minnesota
Posts: 3,379
Rewards Points: 2,960

Re: Include Tax In Estimate?


I had a tree trimming service do some work for me.

I got an estimated price that listed the work to be done (trees trimmed, trees removed, shrubs removal, stump removal, disposal, etc.) that was totaled and the estimate stated that it was "Subject to applicable taxes). As usual, it ended up being more more work than anticipated since a little extra as approved.

It took almost a month to get billed out. When the bill came, it was just as estimated and they got around to trying to account for the extras, but it was the estimated price plus appropriate taxes. - I paid it immediately.

A few months later, I bumped into the firm owner and mentioned the extras and he said it was the right way to do it, since everything (mostly labor) was close enough after talking to the foreman. He said it went well and the estimate had enough cushion in it so it was the billed price since there are always overs and unders on estimated price. - He did say the guys liked Bud instead of what I put out for them when they were getting along on the work. I never saw the firm owner excet when he stopped by the job for a few minutes and grab a beer on a hot day.

An estimate is not a bid, but it provides a general scope. The tax is what it ends up to be by legislation.
__________________
Dick

Engineer, designer and consultant recently active domestically and internationally on construction and design in about 40 countries.

Last edited by concretemasonry; 04-10-2014 at 12:51 PM.
concretemasonry is offline  
Old 04-10-2014, 12:50 PM   #16
Hair Splitter
 
TNTRenovate's Avatar
 
Trade: General
Join Date: Aug 2010
Location: Naperville, IL
Posts: 18,244
Rewards Points: 1,100

Re: Include Tax In Estimate?


Quote:
Originally Posted by Kolbym View Post
this is more of a rhetorical question/thread than anything. it's probably just beating a dead horse also. the question is really a sales question. when you know you're bidding against illegitimate contractors, would it help to try to prove to the customer why my cost is more. i know the answer deep down, just wondering if anyone has found an effective way to deal with a costumer who has the money, is not primarily interested in the lowest price, but is fine with paying a "contractor" under the table in order to save a buck. I've already submitted my bid on this job and have walked away not expecting a call.
I don't see the difference. If I have to convince them on any level pertaining to price they are not someone I want as a customer.

If they are wrong l willing to pay cash under the table, they are already screwing me. They are assuming that I am willing to take the risk of not paying taxes on the job to make a few extra bucks. A customer who wants me to break the law to save then ac few bucks is not worth the time.
__________________
Tried & True on Facebook
Tried & True Website
Quote:
Originally Posted by CarpenterSFO View Post
You ask for your money frequently, and you collect it quickly, else you stop working immediately.
TNTRenovate is offline  
Old 04-12-2014, 04:16 PM   #17
Pro
 
mk5065's Avatar
 
Trade: home remodeling
Join Date: May 2009
Location: south jersey
Posts: 130
Rewards Points: 89

Re: Include Tax In Estimate?


Quote:
Originally Posted by ranteso
People who believe a "cash" payment project can be executed substantially less than a check payment project have not a clue about their business costs. How does cash mysteriously make all the costs go away or reduce them? Everything still costs the same amount regardless of how you are paid. Sure you can circumvent Uncle Sam to a degree, pocket cash and save on your own end, but why are you willing to be a criminal by intentionally evading your tax obligation to save some stranger money? You're not in business to save people money, you're in business to make money. Be a pro, present yourself as a pro, charge like a pro and do a pro job
The only time cash is good is when the checks are pouring in! What's the point if you need the money? It goes into the account to pay bills anyway.

Advertisement

__________________
There's alot more to it then just putting on a toolbelt
mk5065 is offline  


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
1st estimate today... Watkinsbobcat Marketing & Sales 8 04-13-2011 09:23 PM
Commercial estimate by square footage John Watson Electrical 2 01-14-2011 02:48 AM
ceiling tile estimate Mikethehandyman Carpentry 10 06-25-2009 08:25 AM
Does anyone have a estimate form with a charge involved thegreek File Swap 11 06-07-2009 02:24 PM
Building Demo Estimate LNG24 Excavation & Site Work 7 05-07-2009 05:21 PM

Join Now... It's Fast and FREE!

I am a professional contractor
I am a DIY Homeowner
Drywall Talk is for
PROFESSIONAL CONTRACTORS ONLY!

At DrywallTalk.com we cater exlusivly to professional contractors who make their living as a contractor. Knowing that many homeowners and DIYers are looking for a community to call home, we've created www.DIYChatroom.com DIY Chatroom is full of helpful advices and perfect for DIY homeowners.

Redirecing in 10 seconds
No Thanks
terms of service

Already Have an Account?