How to invoice in New York

Repairs are taxed, capital improvements are not

New York’s state sales tax is 4 percent before local additions, and the combined rate is far higher in places like New York City. The state taxes many services that other states do not, including installing, maintaining, servicing and repairing property.

The key exception is a capital improvement, work that adds to the value of the property or extends its life. A contractor who does a capital improvement for a customer does not collect sales tax on it, and the customer usually signs a Certificate of Capital Improvement. The Department of Taxation and Finance explains the difference with examples, and it is worth reading before you quote.

• Repair or maintenance of existing property: generally taxed.
• Capital improvement: generally not taxed, with a signed certificate.
• New construction: different rules again.

Home improvement licences are local

New York State does not issue one statewide contractor licence. New York City’s Department of Consumer and Worker Protection licenses home improvement contractors, and several counties around the city, such as Westchester and Nassau, require their own licences. Plumbers and electricians are licensed locally as well.

Where you hold a licence, print the number on invoices and estimates. In Paylark the licence field is optional, and the label reads “License / registration #” so you can change it to match your licence’s name.

Written contracts

New York’s home improvement contract law requires a written contract with particular terms for residential jobs above a small dollar amount. Ask the Attorney General’s office for the current rules, and for any limit on deposits, which we do not state here: check local rules.

Registering to collect tax and local rates

A business that sells taxable goods or services in New York has to register with the Department of Taxation and Finance for a Certificate of Authority before it starts collecting tax, and the department asks you to register well ahead of your first taxable sale. Collecting tax without registering is a problem in its own right, so do this first.

Local rates are added to the state’s 4 percent and are set by where the job is, not where your shop is. New York City’s combined rate is 8.875 percent, and other counties differ. Look up the rate for the job address each time, and keep the capital improvement certificate with the job file whenever a customer signs one.

Customers sometimes ask whether to pay tax on a mixed job, say a repair plus a new fixture. Quote them separately, or say on the invoice which part is the repair and which is the improvement, so the tax follows the work.

An invoice that separates the tax

• Your name, address, phone and licence number.
• The customer and the address of the job.
• A line saying whether the work is repair or an improvement, when it matters.
• Materials and labor separately.
• The tax rate and amount when tax applies.
• Due date and how to pay.

Cleaners, plumbers and contractors will find the details on the pages for cleaners, plumbers and contractors. See the pricing or try the demo. General information, not legal or tax advice.

Official sources

Check the rules with the people who write them:

• New York State Department of Taxation and Finance: tax.ny.gov
• NYC Department of Consumer and Worker Protection: nyc.gov/dcwp

Rules change and this page is a starting point. Confirm with your state revenue department and licensing board before you rely on it.