Does anyone use a tax service like the one on homeaway for taxes & licensing? My property is in Pawleys Island S.C. I am wondering if it is difficult to get started getting the tax licenses or should I use a tax service? The prices seem resonable and they say they will get the licenses & notify me of the tax owed each month & will handle payments. I am not sure if I should do this on my own or thru the service, any advise?
I just began our vacation rental enterprise this spring (June, to be precise) and found the sales & hotel tax process to be straight-forward. The most difficult part was getting the proper form completed for the Georgia Department of Revenue.
The county where our vacation is located requires a 5% "hotel/motel excise tax" on the rent portion of the guest's stay. I must submit a very simple form each month that lists the total rent for the month, and 5% of that as tax. Of the 5% tax, we are allowed to keep 3% for collecting and remitting the tax payment. And of course, I must enclose the check.
The state collects all the sales tax (in our case, 4% for the state and 3% for the local county).
The state has paper forms and on-line forms. The sales tax is charged on the rent plus any other fees (like cleaning fee). The state also allows us to keep 3% of the tax collected for handling this.
I have a spreadsheet that I update with each rental and at the end of the month it is easy to determine how much is owed to each agency.
We also have a property in SC which we have been renting for almost 4 years. It has been a learning experience, to say the least! We have a professional prepare our taxes every year and keep detailed records about the cabin and all expenses. We were completey unaware that we needed to be paying state taxes and that we needed a business license. We were not alone as I have received email from other SC renters who were in the same situation. The tax folks have requested our records for 3 years and we also had to include $50 for the business license. It has been a real shock to our financial system but of course we want to follow the letter of law. I think the collection of the 7% tax will be straight forward once we get started and we plan to handle it ourselves. We have other taxes set up on quarterly payments so that is what we will do. We are self-employed and use a CPA for all of that so we were not prepared to be hit with a tax that he was also unaware of. There was a customer service phone # on the letter requesting the tax records and the lady has been very helpful. Rather than pay a service we plan to take advantage of the people who will be receiving the payments. Good luck with whatever you choose to do.