Pricing & Sales Tax

<p>I am just curious how most of you deal with the issue of sales tax when discussing pricing options with your clients. Do you give them your package rates and let them know that __% sales tax will be added onto the final cost (assuming that the final product will be delivered in the same state your business operates in)? Or do you build the sales tax into the rates you discuss with your clients?</p>

<p>I show clients a final price (tax included) for weddings on my rate sheets but in the contract I break out the tax. For after items like prints and albums, I price everything plus tax.<br>

<br />You're also going to run into clients who will tell you that another photographer doesn't charge sales tax and that they don't want to pay it to you. You can use this scenario to your advantage by pointing out to the client that if a photographer doesn't charge the required taxes they're probably a fly-by-night hack who will take your money and provide less than professional service and quality.</p>

<p>In Florida, you MUST break out sales tax as a separate line item. At my place of work, we didn't do that on a meal plan and had to pay a penalty. Only place in Florida you can include tax that i am aware of is on a menu board behind a meal counter, as long as the board states "includes tax". All states are different. Check your before you say "tax included" </p>

Whenever I gave a quote I always calculated the sales tax for the customer and would just say for example: " I really

appreciate the opportunity to work for you and would be very pleased to do your job if you want to use me. My fee for

services would be $750 plus $45 NJ Sales Tax. " That's it, I never made any thing extra of it. Occasionally a customer

would ask if they paid cash could I cut it back blah-blah, I just said "Sorry, no, the State is very strict and the penalties

very stiff and I'm not in a position to short cut them".

My prices do not include tax. I can't think

of many places that include tax in the

advertised price.

<p>Interesting!<br>

In Virginia if you get your car fixed the bill is presented as parts and labor.<br>

The "parts" are taxed, the "labor" is not taxed.<br>

Isn't a significant section of a photographers presentation labor?<br>

If you have your house painted, tax on the paint, no tax to pay for the painter.<br>

Shouldn't this be similar?<br>

Maybe nobody wants to tell the customer what the breakdown of product actually is. ?</p>

<p>If you are charging people prices over the production cost you should still be paying the sales tax on that price you are charging them, not sales tax on what it costs you. For example when I sell my prints on zenfolio, it calculates the state sales tax on the price of the item for the customer, not the price of the item for me. When I sell an album I outline how much the production cost is and how much my design cost is. The sales tax is on the production cost of the album. I am not an accountant, but my father in law who does my taxes is, and he told me this is the way to do it. When I sell a DVD with the high res jpgs with the reprint rights, I do it for $490 for the reprint rights and $10 for the images on DVD. It costs me $10 for the light scribe DVD + case + printed cover for the case so that is what is taxed. This type of set up works for Massachusetts. I can't speak for other states.</p>

<p>@john - what is and isn't taxed is up to the state. Many states call photography a service, not labor and may require sales tax on services. <br>

<br />In MN for example a service is taxable if the product is delivered physically to the consumer. Of if I shoot a wedding and deliver a dvd of images or a proof book then by law, it is taxable. How I represent that (tax included or tax extra) is up to me. But if I deliver a set of images electronically (via e-mail or dropbox, etc...) then it is not a physical delivery so it is not taxable. </p>

<p>Best advice for the OP - check with a local tax accountant or call the state's commerce dept. They will be able to tell you the correct answer and keep you out of trouble. </p>

<p>Dave</p>

 

Each State has their own fine print to understand. There

were times when I would specifically bill for hours of

finishing labor and materials to an industry, but in most

cases they had a manufacturers sales certificate and didn't

pay tax anyway. Consulting your accountant is definitely the

best route.

<p>Good advice to check with local state tax authorities. What I was told was that in my state, South Dakota, if any part of my package price includes a tangible delivery, the entire package price is subject to state tax.</p>

<p>If I have a package that purely involves only labor and the results are only available online, no tax. If I provide paper proofs or even a thumb drive with images, then the entire package is taxed.</p>

<p>Eric</p>

Wherever you live talk to you your accountant. This is very tricky to say the least. If you screw up on your state tax rest asssured the federal tax board will be reviewing your records as well, same with the fed sending into to your state.

 

A friend was buying albums and not paying taxes, nor did he have a tax ID. Well he got into all sorts of trouble, fines, interest, whatever they could dig up.

 

Run you business the way you wish. Try to find a good CPA. for guidance.

 

Another friend got busted. Interesting story. The daughters father deducted part of the wedding off because he was incorporated. The daughter was part of the corporation. Long story short the father wrote of part of the wedding as a corporate event, giving her, the photographer a business check. Opps, busted. She didn't report the check, nor was her business registered. Ouch...

<p>Bob - <br>

Double ouch. </p>

<p>Another thing to think about is that if the state does come in and do a sales tax audit - You'd dang well better have that money in a separate account - not in your primary business account. I see companies locally who get sideways with the state all the time for just dumping all their revenue into a "business" account - then not paying sales tax when it is due. </p>

<p>They get the double whammy because a) they didn't pay sales tax and b) they used sales tax money for other expenses. But again an accountant can help avoid all of this. </p>

<p>Dave</p>