Sales tax on yard card rentals: what to collect and what to keep track of

In many states, yes: renting out goods is taxed the way selling them is. Texas taxes "all retail sales, leases and rentals of most goods" at a 6.25 percent state rate. Florida says each "sale, admission, storage, or rental" is taxable unless it is exempt. Washington requires anyone renting goods to consumers to collect sales tax on the rental price.^[2][5][7]

Not every state works that way. California generally treats a rental as subject to use tax, and lets a rental business choose in time to pay tax on what it paid for the item instead of collecting it on each rental. Rates also differ by city and county within a state.^[11-12]

So the first step is the same everywhere: ask your state's revenue department how it treats renting out a yard display, or ask an accountant who works in your state.^[15]

It can be. Washington counts a delivery charge on a taxable sale as part of the selling price. California says a delivery made in your own vehicle is generally taxable, and so is the charge to bring rented goods back at the end.^[8][11-12]

Other states leave delivery out of the taxed price. The rules shared by the states in the Streamlined Sales Tax agreement let a state exclude delivery charges, and a fee that is not listed on its own line on the invoice may not qualify. Most yard card businesses sell one price that covers the display, delivery, setup and takedown, which can make the whole price taxable. If you charge an out-of-area fee, show it as its own line, and ask your state how setup and delivery are taxed.^[14]

Usually, in a state that taxes rentals. Texas says you must get a sales and use tax permit if you rent goods in Texas. California requires a seller's permit to sell or lease goods that would be taxable if sold. Florida requires each location to register to collect, report and pay sales tax.^[3][5][13]

California charges no fee for the permit, though it may ask for a security deposit. Other states set their own terms, so check before your first booking.^[13]

As often as your state says, usually monthly, quarterly or once a year, and often decided by how much tax you collect. Two examples show how different the lines are:

Texas tells each new permit holder whether it files monthly or quarterly when the permit is approved, and expects a return even for a period with no taxable sales. Most new Florida businesses start out filing quarterly.^[2-3][5]

No. Washington calls collected sales tax trust funds that must be paid to the state. Florida says it becomes state money the moment it is collected, makes the business its custodian until it is paid over, and asks for a separate accounting of it.^[6][9]

Keep the tax apart from your sales. A tax-inclusive total makes a month look better than it was, and the tax still has to be paid. How it goes on your federal return depends on whether your state puts the tax on the buyer or on you, so ask your accountant.^[18][20]

A total for each filing period of what you booked, what you charged in tax and what you refunded, plus the receipts behind them. The IRS lists sales slips, paid bills, invoices, receipts, deposit slips and canceled checks as the documents that support a return, and its own example works out monthly sales by taking out the sales tax collected.^[16]

• The IRS says to keep records 3 years in general, and longer in some cases.
• Texas says to keep sales and use tax records for at least 4 years, including every rental.
• Florida says at least 3 years from when the return was filed or due.^[4][6][17]

Refunds matter here: a canceled booking that was refunded should not stay in the period's sales. And if a card processor sends you a Form 1099-K, its total is not reduced by fees or refunds, so check it against your own records.^[21]

Everything you spend to run the business. The IRS calls a business expense deductible when it is ordinary, meaning common in your trade, and necessary, meaning helpful and appropriate for it. Schedule C, the form most sole owners file, groups expenses into lines such as advertising, car and truck expenses, contract labor, insurance, supplies, repairs, and taxes and licenses.^[18-19]

• Letters, number sets, flair, stakes and storage bins, and what you replace when they break.
• Fuel and vehicle costs for setups and takedowns.
• Advertising and your website.
• Card processing fees, which your processor lists for you.
• Help on busy weekends, insurance, and licenses.

Sales minus those expenses is your profit, and it is the number to watch month to month. Which expenses you can deduct, and when, is a question for your accountant.^[18]

YardCardOS records the tax on every booking as it is paid. On plans that include money reporting, its reports show sales before tax, the sales tax you collected and refunds for any dates you pick, alongside the expenses you enter and your profit, with a spreadsheet to send your accountant. Talk to us^[1]

It does not file or pay your sales tax, and it is not tax advice. It gives you and your accountant the numbers to work from.