On most Florida construction jobs, the contractor pays sales tax on materials at the supplier and does not charge the customer tax. The exception is a contract that itemizes the materials before work begins. Kissimmee is in Osceola County, where the surtax adds 1.5 percent to the state's 6 percent.
This guide from Shea Business Solutions covers how that plays out in a Kissimmee contractor's books. It is general information, not tax advice. The Florida Department of Revenue has the final word on what you owe, and the sources are listed at the end. The Department's construction publication we used is revision 09/14 and the rule took effect in 2003, so check both against the current versions before you rely on them. Our page on construction bookkeeping covers the rest of a contractor's books.
Does a Kissimmee contractor charge customers sales tax on materials?
Usually not. The Department of Revenue's guide to construction, improvements, installations and repairs says that under a lump sum, cost plus, fixed fee, guaranteed price or time-and-materials contract on real property, the contractor is the final consumer of the materials. That contractor pays sales tax to suppliers on all purchases, including those for the contractor's own use, and should not charge the customer tax. Rule 12A-1.051 of the Florida Administrative Code says the same, and adds that listing materials and labor separately on a proposal or invoice does not change it.
In the books, the tax a supplier charges is part of the materials cost and goes on the job. There is no sales tax payable to track for these jobs.
When does the answer flip to charging tax?
On a retail sale plus installation contract. The contract lists and prices every material before the work begins, sells those materials at an agreed or regular retail price, and charges for the work separately, either at an agreed price or by time used. The customer also takes title to the materials as delivered and carries the risk of loss, rather than accepting only title to the finished work.
On those jobs the contractor buys the materials tax-exempt for resale with a Florida Annual Resale Certificate (Form DR-13) and charges the customer tax on all of the materials. The Department says contractors generally should not register as dealers unless they owe tax on items they fabricate, but a contractor who performs real property contracts and also sells tangible personal property at retail must register.
Which county's surtax applies to a Kissimmee contractor's materials?
Florida's state rate is 6 percent, and most counties add a discretionary surtax. The Department of Revenue's table (form DR-15DSS, revision 11/24) lists the counties around Kissimmee like this:
Which of those rates applies depends on the contract. For real property improvements, the Department's guide says to use the rate of the county where the consumer, usually the contractor, takes delivery of the materials. For a retail sale plus installation contract, it is the county where the improvements take place. If a contractor fabricates items in its own shop and pays use tax on them, it is the county where the fabrication happens.
A Kissimmee contractor who collects materials at a supplier's counter in Orange County and one who has the same materials delivered to a job site in Osceola County can end up on different rates, so when a bill's tax looks off, check where delivery was taken first.
What about subcontractors?
The rule covers subcontractors as well as general contractors. It says that on a project with several subcontractors, each one is responsible for the tax on their own subcontract. In the books, treat each subcontractor's invoice as a job cost and do not assume sales tax will or will not appear on it. If a subcontractor's invoice shows sales tax, or you are unsure how a job was structured, ask the Department of Revenue or your tax preparer before you book it.
What is use tax, and when does a contractor owe it?
Use tax is what a contractor owes when sales tax was not paid at the time of purchase. The Department's guide names three common cases:
- Materials bought from an out-of-state seller that is not registered to collect Florida sales tax. Use tax and surtax are owed when the materials come into Florida.
- Materials bought tax-exempt for resale that are later used on a job instead of resold. The contractor reports use tax plus any surtax.
- Items the contractor fabricates for its own use, taxed on the fabricated cost.
Flagging any materials bill with no tax charged catches most of this, since someone can ask why before the quarter closes.
How to set this up in QuickBooks Online
- Record each contract type on the job (lump sum, cost plus, itemized materials). It decides everything above.
- Enter supplier bills with the tax the supplier charged, and assign every materials bill to a job. Our guide to job costing for contractors shows the setup.
- Note on each bill whether the materials were picked up or delivered, and the county.
- For itemized-materials contracts, add a separate taxable materials item and keep the resale certificate on file with the contract.
- Flag out-of-state bills and any bill with no tax so use tax can be checked.
Construction bookkeeping for Kissimmee contractors
Shea Business Solutions keeps contractors' books remotely in QuickBooks Online, Kissimmee included. Our construction bookkeeping page covers job costing, payroll and cleanups for builders and trades, and bookkeeping in Kissimmee covers the monthly work for other businesses in the city. If your jobs hold back retainage, see how to record retainage. To talk it through, call (603) 759-8547.
Sources, read October 27, 2026: Florida Department of Revenue, GT-800067, Sales and Use Tax on Construction, Improvements, Installations and Repairs (revision 09/14); Florida Department of Revenue, DR-15DSS discretionary sales surtax rates (revision 11/24); Florida Administrative Code, Rule 12A-1.051, Sales to or by Contractors Who Repair, Alter, Improve and Construct Real Property.