Hello, we are in a state where software that’s installed on a device (e.g. AV, RMM, etc, but not SAAS) is subject to sales tax. Labor is not.
We like to bundle services so clients have a line item like “Managed Service User”, each including the AV, RMM, support, etc.
Let’s say we charge $100 per user (not really, I’m using example numbers here). Only about $10 of that is taxable software. The rest is labor.
I though we’d be able to use Syncro’s bundle feature, but then I find that you can’t use quantities greater than 1 for bundles (ugh!).
Let’s say sales tax is 5%. If we were able to use the bundles, the tax on the software part only would be just $0.50 ($10 * 5%). Instead, we’re charging sales tax on the entire $100 line item, so $5.00 in tax. So I’m collecting $4.50 extra per user every month for the state, for no good reason.
My options are to:
- Keep a single line item for users. Since I can’t use bundles for this, I need to charge tax on the entire item.
- Break the bill down into multiple line items. Makes things confusing and I don’t exactly need clients to see that the tools only cost $10 for a $100 user.
- Give them a single line item and track sales tax manually in a spreadsheet or similar, wasting tons of time.
How are other MSPs handling the sales tax dilemma when charging per user?