Taxes for wedding photography services

It was brought to my attention, recently, that I needed a vendors

license for my photography business that I was not aware of. OOPS! I

had all the other tax requirements/documents, but wasn't aware of

the need for vendor's license, that I now have by the way. Another

thing that I was not aware of was the need to charge taxes. I didn't

think taxes, in Ohio, were charged for services. I thought taxes

were charged for material items only? So I guess I am still

learning. Anyway, how do you all charge taxes for your wedding

photography service? Figure out what it would be, then include in

price of the service, or just have a tax tacked on to the cost of

service and give a total? Thanks. Jeff

In Pennsylvania photography as a service is taxable (sales tax). It's not just the

tangible goods. It varies state to state, but in PA you charge sales tax on the whole

billable amount. ie if you charge $2000 for the package (album, time, proofs etc.) you

have to charge 6% sales tax (PA's tax) on that whole amount. You file a quarterly

statement or monthly depending on your billable sales (it will be quarterly the first

year) and pay what you've charged. In PA the nice (sarcasm) officials let you keep 1%

of that tax charged for your business. Of course you'll pay income tax on that 1%.

 

In PA it's a sales and use tax license you need. Otherwise there's no vendors license

needed.

I have been told several different things by several different people on how to deal with taxes

when your a photographer. I would love to hear everyone's answer!

I forgot to add, if you have a lot of out of state clients, you wouldn't charge them

sales tax unless they took delivery on the items in Ohio. For instance if you went to

Arkansas to shoot a wedding and shipped them everything afterwards you don't

charge them sales tax (if that is something you do you should check with the locals

you are working though).

Jared:

I was told by a State of Ohio Tax Rep that I charge Ohio tax to those that come to me for my photography service, regardless of the fact that they may be out of state. He said it's because my studio is a permanent, stationary, place of business in Ohio that I charge Ohio tax. He said if I did alot of traveling to other states across USA, and did business in all of those other states regularly, that there is a particular type of vendors license that would be required, but since I am local (Ohio), and most of my business will be in Ohio, that a standard vendors license is all that I will need. I did expalin to him that since I have my business located just a few miles from the Indiana State Line, that I also do business in Indiana, but he said that was fine because they come to me in Ohio to obtain my service. This is definately the down side of having my own business: taxes, taxes, and more taxes.

My other question, which was my main question, is how do you charge the sales tax to the client? Add the tax to the total cost, where the tax is shown at the bottom of the receipt like "normal"? Or, figure what the tax would be and add it in the cost of the package and not have it show? I feel the first would be easiest/best. That way, if the state wants to audit me for whatever reason, I can easily show what I charged for tax and show that it's equal to what I paid in taxes? So they don't think I am shorting them? What do you think?

In Maine there is no taxes on services. How services are converted to goods is interesting:

 

Tax must be charged based on the entire sale price of the property sold to a customer for use or consumption, including any services that are a part of the sale. "Sale for use or consumption" includes not only sales for personal consumption, such as family portraits or wedding pictures, but also sales for use in a business activity, such as a sale of a photograph to a newspaper or magazine for publication.

A sitting charge, where no photographs are sold as a result, is not a sale of tangible personal property or fabrication services and is not taxable. If a sale does result, however, the total amount of the sale price, including the sitting charge, is subject to tax.

 

http://mainegov-images.informe.org/revenue/salesuse/Bull3.pdf

 

The tax man has thought of all the angles.

The way Joe answered is how it is in Michigan. The Michigan treasury described it to me in this way. She said that the sitting, and the service work or labor of a wedding is what goes into the final sale, which is the portraits. Just like the service or labor of a company producing a product for sale has to charge tax on the whole product, and can not deduct part of the price for the labor. We do not have to pay sales tax on sittings that do not result in a sale. I have my tax included in my final package price. It is so much easier to work in even numbers. Then when I file my sales tax, I just take the $$$ sold and divide it by 1.06 (6% tax) to get the actual total of the package before tax, then the rest is Uncle Sam's. I think I am going to change it for 2006 though.

You should have a "tax exempt" purchase card from your state for the purchase of film and processing. Then you add in the sales tax on the finished package price. In Florida, that is the way one can go.

 

 

 

If a city government has a "tax exempt" certificate, the sales tax goes into the non-sales tax area if no sales tax is charged, same with county school sales for administration use.

 

 

 

The I.R.S. has a different method for collecting...each 3 months, a payment gets to be mailed in.

>>> You should have a "tax exempt" purchase card from your state for the

purchase of film and processing. <<<

 

Just be careful about what's really tax exempt and what's not. In my

state (South Dakota), I pay sales tax on anything that isn't handed

over to the customer. So unless I hand over negatives, I am expected

to pay sales tax on film. Processing and prints would be tax-exempt,

though. Basically, the state wants to get tax on everything at least

once. If I buy albums tax-exempt that I take out of inventory to use

as samples, I then need to pay the equivalent of sales tax on those.

 

My state revenue people were really helpful in helping me figure out

what forms I needed to file, and what I needed to do to become a

lawful, tax-paying business.

"I have been told several different things by several different people on how to deal with taxes when your a photographer. I would love to hear everyone's answer!"

 

You will be much better off getting tax advice from a tax professional. Trust me.

The laws vary, but in most states, as in mine (Wisconson), sales tax IS to be charged for services rendered, not just for hard goods delivered. Whether you decide to add it on or absorb it into your final cost is up to you. The government doesn't care, as long as you calculate their share correctly. I think that's been covered pretty well.

 

On a related tax topic, I'd like to remind those of you who enjoy the seeming "tax-free" advantage of buying all your gear online (through B&H, etc.) from out of state that you ARE responsible for paying tax on those items, equivalent to the sales tax in your home state. This requirement is in the state income tax forms, but many people don't comply. Most consumers of goods for personal use do NOT ever pay this tax, and online and mail-order commerce is simply too huge for the government to try to press individuals to conform or to try to enforce the law. But, if you are a BUSINESS, you can find yourself in a bad situation if you purchase cameras, lenses, printers, computers, etc. from out-of-state and don't pay the tax. Then, you'll be hit with the original tax, plus penalties, and the added joy of knowing that your tax return will be flagged for very careful scrutiny in the future.

I suggest you speak to someone in your Ohio revenue department and get it from the source and be sure to take notes and record the persons name & phone number. They may even mail a letter to confirm.

 

Here in NC I was told to add 7% to the total of any amount I am paid for regardless of prints or services. My quote says sales tax to be added. So I add it as line item after the subtotal. No one questions it.

 

By the way, be extra careful to file and pay your sales taxes monthly or quarterly. They have no tolerence for non reporters.

To the best of my knowledge you are not allowed to bundle the taxes into the total price. This varies state by state.. but I know a photographer in Ohio and he can't bundle it into the price, it has to be added separately. I'm sure this, too, varies state by state. Check with your tax consultant.

State and COUNTY laws varry!!! Talk with a CPA!!!

 

Some couyties have higer sales taxes due to bond issues ect. If the wedding takes place in County A, the B&G live in County B, and the studio is in County C, how much is the sales tax and which county gets it? In Orlando , FL area this is very possible as is Atlanta GA.

 

That's why you need to talk to a CPA!!!!!

I really appreciate the responses, but I think most responses missed the actual question I was asking. I know to call the State of Ohio with tax questions. It wasn't a question about tax laws and how they vary from state to state, or county to county, but thanks just the same. We all know the government is going to get their cut regardless. I was just curious about how some photography businesses show the actual tax amount on the contract and/or invoice. Do you actually show the tax amount, or do you just tell them that taxes are included in what ever price you have for your wedding photography service? Sorry if I didn't ask that the right way.

You should always break it down on your invoice. Clients will question it, but if you

explain that it's required by state and local law, they understand. You should tell them up

front in your quote so they aren't suprised by it. On a high priced job it can add a lot.

Often I'll just add it into a job quote, and then break itup on the invoice. I have a colleague

that got audited and though he had charged and paid sales tax, he got a lot of hassle over

the fact that he just had a single figure on his invoices. Do yourself a favor and have a

subtotal, tax amount, and then a total.

One should contact YOUR state tax board; and avoid this web rubbish; which may not apply to you state; or be wrong.<BR><BR> EACH state is different.<BR><BR> When audited; you will be charged for taxes not collected; the penalites; then the interest too. <BR><BR>Figure paying DOUBLE; and being on an audit list for being a tax evasion goof.<BR><BR> When in California; the chaps there had me charge tax on prints and services. Also I paid taxes on all camera gear bought out of state; film bought out of state. EVERY ITEM I bought out of state they nicked me on; then the penality was added; THEN interest.............<BR><BR>The tax number means little; what matters is that you know YOUR STATES RULES; before you get racked over the coals; and fried just for fun. See an accountant; learn your own state tax rules. <BR><BR>The auditorss take a dim view in folks skirting their laws. a heck of alot of folks throw around tax id numbers like they are a get out of jail free card; many times they dont apply. Then you get dinged; with back taxes; a penality; and interest added on too. The auditors will dig; and unearth your goofs; your tax evasions; and get their money; with penalities and interest. <BR><BR>See an accountant.

Some states require one to tax the shipping on an invoice. Thus goods sent in state for an invoice of 75; with 25 for next day air shipping; are taxed on the 100 dollar total. So a 7.5 percent tax would give a 107.5 dollar invoice.

In your invoices are not clear as to whether tax is applied or not; you might get paid wrong; or have to go to war over the missing tax; or knucke down and eat the tax; ie receive less actual usable dollars. If the invoices are not clear; the auditors get excited; and hunt more; like chuming for sharks with raw hunks of meat. Most customers want to know the total with tax; be clear in a quote or contract.

Thanks Jared. That is what I have already started to do.