Wednesday, April 4, 2012

The Bottom Line for Your Budget: Overlooking Taxes and Gratuity

Few things control a wedding more than the budget. It’s so powerful, in fact, that here at HJ Planners we commonly refer to it as “The Mighty Budget”.

In addition to being powerful, budgets are tricky. They don’t reveal their true colors until after they’re irrelevant – when your wedding is over.

The most common catch most couples fall into when working within their budget is forgetting to include two of the largest expenses it should include: taxes and gratuity. This often happens because vendors don’t typically include these amounts in their quotes.

In D.C., tax on wedding venues and related materials is commonly 10%. Gratuity averages a whopping 15-22%. If you want to see your budget explode, pop those numbers in and calculate the total. A 10% tax and 15% gratuity charge is about $61.00 for every $200.00 spent, or about $4,700.00 for an $18,000 wedding.

Administrative Fees

In addition to taxes and gratuity, some vendors charge “administrative fees”. These fees represent the cost of the general services provided and are used to reimburse the vendor for any paperwork, office supplies or other expenses used to perform the job you hired them for. In D.C., many vendors charge approximately 6% as a service fee. That comes to $12.00 for every $200.00 spent, or about $1,000 for an $18,000 wedding.

The key to preventing a budget explosion is to ask every vendor to include these amounts in their quotes. At the very least, ask them to include the specific percentages they will charge you. The latter request is especially important in metropolitan areas with multiple, contiguous states – such as D.C.’s Maryland, Virginia and District boundaries. With those percentages, you can calculate the true bottom line of your expenses, and keep your budget under control.

Avoid being surprised by this fee by asking for a complete list – containing amounts or percentages – of every additional fee the vendor charges. Your budget and stress level will thank you for your forethought in doing so.