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Florida Sales Tax: Should your business be collecting it from customers?

The topic of sales tax in Florida is a common issue brought to me by clients. The short answer to this question is that you need to refer to the Florida Department of Revenue here: but before you do that, this blog post will hopefully provide a few quick thoughts to apply to your business to help you determine whether or not sales tax needs to be collected from your customers and reported to the State.

Are you selling something tangible to customers?

For example, do you have a shop (online or physical location) that sells physical items? If the answer is yes, then you almost definitely will owe sales tax to the State which you need to collect from your customers (otherwise you will be stuck with the bill). The easiest way to determine whether or not you owe sales tax as a business is on the question of tangible versus intangible. Most intangible services are not subject to Florida sales tax. For example, CPA services are not subject to sales tax; they are intangible services usually in the form of consultation and skills.

Do you receive rent from a commercial building or short-term rental?

One of the more common occurrences I see clients neglect to pay sales tax is with rental arrangements. Long-term rental agreements on residential buildings are not subject to sales tax, but any rental arrangement on a commercial building is subject to sales tax. The commercial sales tax rate on real estate rentals was recently reduced from 4.5% to 2.0%, but you also need to be aware of the surtax charged by the county where the building is located. Short-term or "transient" rentals are also subject to sales tax, but you are off the hook if you use a common service such as AirBnB or Vrbo. The website service will be charging this sales tax from your tenants and reporting to the State.

Do you own a construction business?

You should refer to this guide from the FLDOR:

In general, any work or repairs completed on real estate property is usually not subject to sales tax. However, whether or not a real estate construction project is subject to sales tax depends on the contract type. Lump-sum contracts would not be subject to sales tax, but cost-plus contracts would.

This blog is not intended to be relied upon as professional advice.

Brock Delaney, CPA

Delaney CPA

1452 US-1 #146

Ormond Beach, FL 32174

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