While many entrepreneurs mistakenly believe that labor and service charges are always exempt from tax, some of the services you perform in your locksmith operations may be taxable. In general, taxes apply to manufacturing labor charges, but not to charges for work considered installation or repair. The travel or service charge is taxable if materials are sold at retail to the customer. This depends on the percentage of taxable charges.
Installation service charges are exempt from sales tax. Materials installed or used for installation may be subject to tax. Security services provided to a government agency are not taxable. Services such as cleaning or repairing shoes, repairing appliances, restoring or upholstery furniture, repairing or cleaning jewelry and grooming dogs are subject to tax.
They continue with examples of manufacturing work performed by locksmiths, such as making new keys by duplication or cutting by code. It is comprehensive, extremely informative and does its best to provide the key to sales tax compliance for locksmiths. The California State Equalization Board has published a “general guide to sales and use tax and regulations that apply to locksmiths. Figuring out how California sales tax applies to a locksmith's work can be even more complicated, as locksmithing involves both taxable and non-taxable transactions.
According to another person at the meeting, there is an Android phone application CA Locksmith Calculator that will provide the amount of taxes needed for a job. Things get even more complicated when you consider that locksmiths buy some products for their use and others for resale. This, according to the California State Board of Equalization, Locksmiths Publication 62, which I will quote and paraphrase.
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