SS pricing and sales tax

[jeffpohl4]

Brief description of my bays, 17' wide, 15' tall and 60' long, bright white poly vinyl walls, bright LED lighting, stereo system playing, High pressure and Ginsan GS 400 pay stations w/ credit card, loaded with about every option you could want. I have seen a lot of talk about pricing and I have talked about my pricing and found it to be a little low at $2.50 for 5 min...what about credit card purchases...does anyone charge different for that and do you or can you charge sales tax on the CC purchases? I charge ST on CC purchases in my IBA but dont know how to handle that in my SS? Suggestions?
I also have a pet wash and charge $3.50 for 5 min...i'm guessing this is low as well? Thank you all in advance, Jeff

 

[MudMoney]

I would guess you got floor heat and maybe doors ? my opinion is be bold and go to $ 3.00 for 4 minutes,don't worry about other washes be the leader.Do you know what your true operating expenses are and it's easier to raise the price.

 

[jeffpohl4]

Yep...floor heat and doors, I guess i was just trying to give a visual aid...there are a lot of run down crappy washes around and some people wouldn't mind paying more to wash in a nice clean bright bay. Really what i was looking for was input on the CC and sales tax side of things. Maybe the condition of my bays are irrelevant in that regards.

 

[Randy]

Jeff, You should raise your prices a little bit, at least to $3.00 for 5 minutes. Pet wash I’d go to at least $4.00 or maybe $5.

In the State of Washington we pay sales tax on everything at the car wash, vending, vacuums, bay time. At this time the tax rate is 9.5%. You take the gross and subtract 9.5% and then pay 9.5% on what’s left. Any purchases from out of state for spare parts that aren’t for resell are also taxed with a use tax at 9.5%. These taxes are paid quarterly

 

[mjwalsh]

Brief description of my bays, 17' wide, 15' tall and 60' long, bright white poly vinyl walls, bright LED lighting, stereo system playing, High pressure and Ginsan GS 400 pay stations w/ credit card, loaded with about every option you could want. I have seen a lot of talk about pricing and I have talked about my pricing and found it to be a little low at $2.50 for 5 min...what about credit card purchases...does anyone charge different for that and do you or can you charge sales tax on the CC purchases? I charge ST on CC purchases in my IBA but dont know how to handle that in my SS? Suggestions?
I also have a pet wash and charge $3.50 for 5 min...i'm guessing this is low as well? Thank you all in advance, Jeff

Jeff,

Based on your car wash description ... it sure looks like you folks give a better value to your customers than your competitors ... I would say charge both the up charge for the sales tax & the merchant fees of all your CC transactions. That way it will make both your more frugal customers & "money is less of an object customers" HAPPY. Being up north like us ... we know that the flow of business is more weather driven than anything else anyway.

You will also be doing a public service by making the general public more aware of the actual costs involved when both the sales taxes & merchant fees are allowed to creep up. Here in neighboring North Dakota we only pay sales tax on the vending & "out of state purchases use tax" which could be as high as 8% depending on our exact locality based on the following charts on this information website: http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States.

We use Paypal Here for iPhone &/or Android for our paper token sales & we up charge the customer exactly what we are up charged & we are pretty sure we are on solid ground when it comes to any potential objections from the various credit card issuers.

BTW we charge $5 minimum for our Pet Wash. On Tuesdays thru Thursdays we give 10% (PLC driven) more than the 7 minute base time. This works out well because people generally carry fives with them & that is what we give out at our few steps away credit card accepting ATM. For the more frugal customers ... we make sure those waterproof goldie dollar coins & some quarters are given out by our 2 Standard ChangeMakers. Thankfully... our Pet Wash is not charged a sales tax & does not take CC. If the Pet Wash did take CC ... our PLC programming & our signs would make sure that the customer was aware of the up charge that is charged &/or included in the charge for that portion of the cost. The process would simply have a slightly different time rate to reflect the CC charges. The simple sign stating the up charge ... would reassure the customer that we were not into deception & trickery etc. like some other places.

We do not have an IBA since the market is over saturated in our area by gas station IBAs & tunnels.

mike walsh http://kingkoin.com/USA_Deficit_Reduction.html

 

[robert roman]

In general, eliminating price gaps with competition by matching average street price tends to influence average sales and total revenue in positive manner.

However, if the relative attractiveness of a store is substantially greater than the most formidable competitor in the trade area, then higher prices can usually be supported.

So, what to do depends on how you stack up against the competition.

For example, if you don’t have any competition, you can pretty much do whatever you want until it would attract a new store.

If you are the best wash in town, become the price setter. Make tax inconsequential.

 

[U Wash]

Determining Sales Tax, calculation

Jeff, You should raise your prices a little bit, at least to $3.00 for 5 minutes. Pet wash I’d go to at least $4.00 or maybe $5.

In the State of Washington we pay sales tax on everything at the car wash, vending, vacuums, bay time. At this time the tax rate is 9.5%. You take the gross and subtract 9.5% and then pay 9.5% on what’s left. Any purchases from out of state for spare parts that aren’t for resell are also taxed with a use tax at 9.5%. These taxes are paid quarterly

When calculating sales tax, you must remember your gross collection is a combination of both revenue and taxes. For a sales tax amount of 9.5% you take your gross collected and divide by 1.095 you will have your actual revenue. Example $1000 gross collection divided by 1.095 gives a gross revenue of $913.24 subtracted from the $1000 collected leaving a sales tax of $86.76.

A second calculation method would be to subtract 9.5% from $1000 collected giving you $95 set aside for taxes and leaving you $905 then you take 9.5% of that figure which gives a sales tax of $85.97. This method has you deducting tax against the tax you collected. You are paying sales tax on an amount less than your gross revenue.

A third calculation of sales tax would be to pay 9.5% on total collected for a sales tax of $95. This third calculation has you paying tax on the tax you collected paying more than you owe.

The difference between method 1 & 2 is small, $0.79 cents but technically it is an underpayment of .079%. Not sure if a state audit would pick up on this but if it did and it was over several years and you added in interest and penalties who knows what it might cost. They might wave any interest or penalties since second method was an honest mistake, but then again they may not wave the fines. I guess I am nit picking but it might be worth noting.

 

[mjwalsh]

When calculating sales tax, you must remember your gross collection is a combination of both revenue and taxes. For a sales tax amount of 9.5% you take your gross collected and divide by 1.095 you will have your actual revenue. Example $1000 gross collection divided by 1.095 gives a gross revenue of $913.24 subtracted from the $1000 collected leaving a sales tax of $86.76.

Joe-U Wash, Randy, & others,

In our state that is the way it is done for our vending items ... no allowance for banks charging for coin &/or currency (yes it is currently happening in our state). It must show up as an after expense rather than before expense ... when it comes to sales tax ... they apparently want that not to be taken off the top ... even though ... in my opinion it would be a truer representation of a truer gross. I suppose it could be why they would rather not have it called a "gross receipts tax". Nowadays (more modern times) the accounts payable people at businesses just let the state's online form do the calculating so they are less likely to even know or remember the exact process leading to the final calculation.

Sometimes, I wonder how some of us see any net income or afford even basic benefits for our ourselves & employees after Randy's scenario also includes potentially rising "merchant fees" from payments that grow too much in the direction of instantly electronically transmitted transactions.

mike walsh www.kingkoin.com

 

[Randy]

The state has a computer program that you can use, just plug in the numbers and it’ll tell you how much Tax you owe.