Do I need to collect sales tax on services in Florida?
Florida generally does not impose sales tax on services. If you’re a consultant, attorney, marketing agency, or similar professional service provider, you typically don’t need to collect sales tax from your clients. This is different from states like Texas or Hawaii that tax many services.
The exceptions matter though. Florida specifically taxes certain services including nonresidential cleaning services, nonresidential pest control, and detective and security services. If you provide commercial cleaning for office buildings or retail spaces, you’re collecting sales tax. Residential cleaning is exempt. The distinction between commercial and residential applies to several service categories.
Repair services on tangible personal property are taxable. If you fix appliances, electronics, or equipment, you charge sales tax on both parts and labor. This catches some business owners off guard because they assume only the parts are taxable.
Services bundled with tangible goods create complexity. A pure consulting engagement isn’t taxable. But if you sell software licenses along with implementation services, the software portion is taxable and how you structure the invoice matters. Lump sum billing can result in the entire amount being taxable. Breaking out the components properly protects you from overpaying.
Certain professional services remain exempt regardless of how they’re delivered. Legal services, accounting services, medical services, and educational services are not taxable in Florida. Engineering and architectural services are also exempt even though they often result in tangible deliverables like plans or drawings.
The rental of commercial real property is taxable in Florida at the state rate plus any applicable county surtax. This isn’t technically a service but it trips up property management companies and landlords who don’t realize they need to collect and remit sales tax on commercial lease payments.
If you’re unsure about your specific situation, the Florida Department of Revenue provides Technical Assistance Advisements for businesses that need clarification. You can also review the relevant statutes or work with someone familiar with sales tax compliance to determine your obligations before you start collecting or failing to collect.
Getting this wrong in either direction creates problems. Collecting tax when you shouldn’t means you either owe refunds to customers or you’re remitting money that wasn’t actually owed. Not collecting when you should means you’re personally liable for the uncollected tax plus penalties and interest when the state audits you. South Florida advisory services like ours can help you determine the right approach for your business model and ensure you’re set up correctly from the start.
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More Questions
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A controller transforms raw bookkeeping data into accurate, decision-ready financial statements. They ensure proper accruals, reconciliations, and month-end close procedures that give you reliable numbers each month.
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A bookkeeper handles day-to-day transaction entry and reconciliations. A controller provides financial oversight, reviews the bookkeeper's work, makes adjusting entries, and ensures accurate financial statements.
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Controllers handle accruals, deferrals, depreciation, prepaid expenses, and other month-end adjustments that transform cash-basis records into accurate financial statements. These entries ensure your books reflect economic reality, not just bank activity.
Read answerWhat is the penalty for sales tax audit findings in Florida?
Florida charges a 10% penalty on unpaid sales tax plus interest at the prime rate plus 4%. If the Department of Revenue determines fraud or willful negligence, penalties jump to 100% or 200% of the tax owed.
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Keep records that document income, expenses, payroll, assets, and banking activity. Most records should be retained for at least three years, though some need to be kept for seven years or longer.
Read answerWhat's the best way to organize receipts for past years?
Sort receipts by tax year first, then by expense category. Scan everything to digital since thermal paper fades quickly. Keep records for at least seven years to cover audit windows.
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