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December 23, 2019

Why You Can't Use Zip Codes for Sales Tax

Any good roofer knows that the profitability of a job comes down to two main components: high quality of work and proper calculation—the prior to avoid the costs of rework and the latter to avoid additional material costs while securing favorable margins. 

While quality of work largely comes down to time frame and experience, there are other reasons calculations can go wrong. From the get go, there are myriad opportunities to mis-measure everything from squares to square footage and miscalculate material costs. But one of the most common and costly mistakes roofers often make is improperly sourcing sales tax information, which can make all the difference in terms of profitability. 


Fortunately, there are plenty of tools out there to reduce potential inaccuracies and discrepancies, like roofing material calculators, roofing measuring software, and roof estimating apps. Unfortunately, very few, if any, provide easy access to sales tax information


The where, how, and why of sourcing sales tax information

While it’s common knowledge that, like building codes, sales tax varies by state, it’s less commonly known that sales tax is broken down even further on the local level—which is most often wrongly assumed to be by ZIP code.


In reality, taking a look at a sales tax map will tell you much of what you need to know—specifically, that tax rates are rarely confined by the boundaries of local municipalities, let alone by ZIP code. In fact, there are places in the United States that boast as many as four different sales tax rates in the same ZIP code. 


Although the in-state variance routinely falls under a 1% difference between tax rates, the financial repercussions for a contractor can be much more significant. Given that the average cost of a new roof hovers around $7,200 nationally, that percentage can equal up to an average of $720, which, if you’ve already provided your customer an estimate, means it’s coming out of your profit margin or will inevitably lead to an uncomfortable—and frankly unprofessional-looking—conversation. 


Of course, there are ways that you can obtain the information necessary to avoid making these kinds of pricey mistakes, but most of them aren’t particularly easy or straight-forward—if you don’t buy that, feel free to pop it into a search engine, source three tax codes at the extremities of your operating area, then clock how much time (and frustration) it takes you to do so. 


How to solve your sales tax sourcing problems

Fortunately, much like the technological advances that have made calculating roofing measurements and material costs as easy as popping a few numbers into a smartphone app, there are also roofing-focused apps like OneClick Code that not only provide all the local building codes necessary to complete a job, but also give you instant and direct access to address-specific sales tax information so you’ll never have to question what should be paid.


In fact, these types of services also come in handy when dealing with insurance claims. Since insurance estimation platforms rely on user-submitted rates to calculate estimates for the costs of materials and labor, having direct access to that verifiable sales tax information can ensure that no one is getting mixed or inaccurate sales tax rates that could result in price discrepancies or even compliance issues. 


Even though figuring out sales tax doesn’t look like plugging a ZIP code into a search engine, it doesn’t have to stress you out or come out of your profit margin. There’s a very effective way to get the information you need without having to spend your valuable time doing so. OneClick Code has all the necessary information you need to get fast and accurate sales tax information, allowing you to focus on more critical aspects of your business.


Learn how data is bringing roofing into the 21st Century


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