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Do you have to pay sales tax on labor in new mexico. Just…

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Do you have to...

Do you have to pay sales tax on labor in new mexico

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

Just started a new business contractor I have one employee and myself

Accountant's Assistant: Is there anything else important you think the Accountant should know?

I charge by the job how do I pay taxes

Submitted: 4 months ago.Category: Tax
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3/12/2018
Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,757
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago

New Mexico does not impose a sales tax, however, they do impose a Gross Receipts tax and based on the following labor is not subject to the Gross Receipts Tax. SEE BELOW:

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New Mexico does not have a state sales tax. However, the state imposes a gross receipts tax (GRT) on many business transactions. This resembles a sales tax, but unlike most states' sales taxes it applies to services, as well as tangible goods.

Governmental gross receipts tax applies only to:

  • The sale of tangible personal property other than water from facilities open to the general public
  • The performance of, or admissions to, recreational, athletic or entertainment services or events in facilities open to the general public
  • Refuse collection or refuse disposal, or both
  • Sewage services
  • The sale of water by a utility owned or operated by a county, municipality or other political subdivision of the state, and - the renting of parking, docking or tie-down spaces or the granting of permission to park vehicles, tie aircraft down, or dock boats.

REFERENCE SOURCE:

http://www.tax.newmexico.gov/frequently-asked-questions.aspx?9674a2e28c1442ce8b25e81c6d015418blogPostId=36b9ad0c917c4bc8b43f5e47867797f8#/BlogContent

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Customer reply replied 4 months ago
since we only offer our services and we do buy the material for the job. How do you recommend we pay our taxes and how do I set up to pay my taxes? I do have a federal id number
Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago

As mentioned, New Mexico does not impose a sales tax on anything. How is your business set up? Are you a sole proprietorship, LLC, S or C corporation.

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Customer reply replied 4 months ago
LLC
Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago

Single member or multi-member LLC?

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Customer reply replied 4 months ago
I know my questions sound dumb, So I pay GRT?
Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago

No question is a dumb question. I need to know if you are a single member LLC or a multi member LLC so that I can inform you which tax for you would use to report your income and expenses on.

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Customer reply replied 4 months ago
single member
Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago

As a single member LLC, you will complete the Schedule C. This is the form that you will report your income (gross receipts) and expenses from your business on. You will use your federal I.D. You do not have to pay GRT on the services that you provide.

Link to Schedule C:

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

Your profit or loss from the Schedule C will transfer over to Line 12 of the Form 1040. Regarding your employee, you will have to pay employment taxes. Refer to the following link for more information relating to employment taxes.

https://www.irs.gov/businesses/small-businesses-self-employed/employment-taxes

My suggestion is that you get a payroll service to handle the payroll tax matter.

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Customer reply replied 4 months ago
What about federal taxes?
Tax Professional: Tax.appeal.168, Tax Accountant replied 4 months ago

Sorry for the delay, i was away from the computer the majority of the afternoon. The Schedule C and the Form 1040 pertains to federal taxes. I think you want to know about state related taxes. For that information you can refer to the following link.

http://www.tax.newmexico.gov/Businesses/default.aspx

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