In Florida, which tax must general contractors collect and remit on taxable sales of tangible personal property?
Correct Answer
D) Sales and use tax
Florida requires businesses to collect and remit sales and use tax on taxable sales of tangible personal property. General contractors must register for and collect this tax when selling materials or performing certain types of work.
Why This Is the Correct Answer
Sales and use tax is the correct answer because Florida law requires general contractors to collect and remit this tax on taxable sales of tangible personal property. When contractors sell materials directly to customers or perform certain types of work involving tangible goods, they must register with the Florida Department of Revenue, collect the appropriate sales tax rate, and remit these taxes regularly. This is a fundamental tax obligation for contractors engaging in retail sales activities.
Why the Other Options Are Wrong
Option A: Unemployment tax
Unemployment tax is incorrect because this is a payroll tax that employers pay on behalf of their employees to fund unemployment insurance benefits. It is not collected from customers on sales transactions, but rather calculated based on employee wages and paid directly to state and federal unemployment agencies.
Option B: FICA tax
FICA tax is incorrect because this refers to Federal Insurance Contributions Act taxes (Social Security and Medicare taxes) that are payroll taxes. These are withheld from employee paychecks and matched by employers, but they are not collected from customers on sales of tangible personal property.
Option C: Federal income tax
Federal income tax is incorrect because this is a tax on income that individuals and businesses pay to the federal government. It is not collected from customers during sales transactions of tangible personal property, but rather paid based on annual income calculations.
Memory Technique
Remember 'SALES tax for SALES transactions' - when you sell tangible goods to customers, you collect sales tax, not payroll or income taxes.
More Business & Finance Questions
A general contractor purchases equipment worth $45,000 with a useful life of 9 years and no salvage value. Using straight-line depreciation, what is the annual depreciation expense?
What is the typical recommended coverage amount for general liability insurance for a small to medium-sized general contracting business?
A contractor estimates startup costs of $75,000 for equipment, $25,000 for initial inventory, $15,000 for insurance premiums, and $10,000 for working capital. They can finance 70% of the total. How much cash do they need?
When establishing professional relationships with architects and engineers, what is the most important factor for a general contractor to consider?
A partnership agreement for a construction company should address all of the following EXCEPT:
A contractor purchases a truck for $60,000. After 5 years, it has accumulated depreciation of $35,000. What is the truck's book value?
A contractor's business plan projects first-year revenue of $500,000 with a 15% net profit margin. If actual revenue is $450,000 with the same profit margin, what is the variance in net profit?
Using the Modified Accelerated Cost Recovery System (MACRS), construction equipment is typically depreciated over how many years?
A contractor is comparing financing options for equipment purchase. Option A: $80,000 cash purchase. Option B: $20,000 down, $65,000 financed at 6% for 4 years. What is the total cost of Option B?
A contractor purchases equipment using a capital lease with a present value of $120,000. How should this be recorded on the balance sheet?